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Effective business managers in the twenty-first century need to be aware of a broad array of ethical choices they can make that affect their employees, their customers, and society as a whole. What these decisions have in common is the need for managers to recognize and respect the rights of all.
Actively supporting human diversity at work, for instance, benefits the business organization as well as society on a broader level (Figure 8.1). Thus, ethical managers recognize and accommodate the special needs of some employees, show respect for workers’ different faiths, appreciate and accept their differing sexual orientations and identification, and ensure pay equity for all. Ethical managers are also tuned in to public sentiment, such as calls by stakeholders to respect the rights of animals, and they monitor trends in these social attitudes, especially on social media.
How would you, as a manager, ensure a workplace that values inclusion and diversity? How would you respond to employees who resisted such a workplace? How would you approach broader social concerns such as income inequality or animal rights? This chapter introduces the potential impacts on business of some of the most pressing social themes of our time, and it discusses ways managers can respect the rights of all and improve business results by choosing an ethical path.
8.02: Diversity and Inclusion in the Workforce
Learning Objectives
By the end of this section, you will be able to:
• Explain the benefits of employee diversity in the workplace
• Discuss the challenges presented by workplace diversity
Diversity is not simply a box to be checked; rather, it is an approach to business that unites ethical management and high performance. Business leaders in the global economy recognize the benefits of a diverse workforce and see it as an organizational strength, not as a mere slogan or a form of regulatory compliance with the law. They recognize that diversity can enhance performance and drive innovation; conversely, adhering to the traditional business practices of the past can cost them talented employees and loyal customers.
A study by global management consulting firm McKinsey & Company indicates that businesses with gender and ethnic diversity outperform others. According to Mike Dillon, chief diversity and inclusion officer for PwC in San Francisco, “attracting, retaining and developing a diverse group of professionals stirs innovation and drives growth.”1 Living this goal means not only recruiting, hiring, and training talent from a wide demographic spectrum but also including all employees in every aspect of the organization.
Workplace Diversity
The twenty-first century workplace features much greater diversity than was common even a couple of generations ago. Individuals who might once have faced employment challenges because of religious beliefs, ability differences, or sexual orientation now regularly join their peers in interview pools and on the job. Each may bring a new outlook and different information to the table; employees can no longer take for granted that their coworkers think the same way they do. This pushes them to question their own assumptions, expand their understanding, and appreciate alternate viewpoints. The result is more creative ideas, approaches, and solutions. Thus, diversity may also enhance corporate decision-making.
Communicating with those who differ from us may require us to make an extra effort and even change our viewpoint, but it leads to better collaboration and more favorable outcomes overall, according to David Rock, director of the Neuro-Leadership Institute in New York City, who says diverse coworkers “challenge their own and others’ thinking.”2 According to the Society for Human Resource Management (SHRM), organizational diversity now includes more than just racial, gender, and religious differences. It also encompasses different thinking styles and personality types, as well as other factors such as physical and cognitive abilities and sexual orientation, all of which influence the way people perceive the world. “Finding the right mix of individuals to work on teams, and creating the conditions in which they can excel, are key business goals for today’s leaders, given that collaboration has become a paradigm of the twenty-first century workplace,” according to an SHRM article.3
Attracting workers who are not all alike is an important first step in the process of achieving greater diversity. However, managers cannot stop there. Their goals must also encompass inclusion, or the engagement of all employees in the corporate culture. “The far bigger challenge is how people interact with each other once they’re on the job,” says Howard J. Ross, founder and chief learning officer at Cook Ross, a consulting firm specializing in diversity. “Diversity is being invited to the party; inclusion is being asked to dance. Diversity is about the ingredients, the mix of people and perspectives. Inclusion is about the container—the place that allows employees to feel they belong, to feel both accepted and different.”4
Workplace diversity is not a new policy idea; its origins date back to at least the passage of the Civil Rights Act of 1964 (CRA) or before. Census figures show that women made up less than 29 percent of the civilian workforce when Congress passed Title VII of the CRA prohibiting workplace discrimination. After passage of the law, gender diversity in the workplace expanded significantly. According to the U.S. Bureau of Labor Statistics (BLS), the percentage of women in the labor force increased from 48 percent in 1977 to a peak of 60 percent in 1999. Over the last five years, the percentage has held relatively steady at 57 percent. Over the past forty years, the total number of women in the labor force has risen from 41 million in 1977 to 71 million in 2017.5 The BLS projects that the number of women in the U.S. labor force will reach 92 million in 2050 (an increase that far outstrips population growth).
The statistical data show a similar trend for African American, Asian American, and Hispanic workers (Figure 8.2). Just before passage of the CRA in 1964, the percentages of minorities in the official on-the-books workforce were relatively small compared with their representation in the total population. In 1966, Asians accounted for just 0.5 percent of private-sector employment, with Hispanics at 2.5 percent and African Americans at 8.2 percent.6 However, Hispanic employment numbers have significantly increased since the CRA became law; they are expected to more than double from 15 percent in 2010 to 30 percent of the labor force in 2050. Similarly, Asian Americans are projected to increase their share from 5 to 8 percent between 2010 and 2050.
Much more progress remains to be made, however. For example, many people think of the technology sector as the workplace of open-minded millennials. Yet Google, as one example of a large and successful company, revealed in its latest diversity statistics that its progress toward a more inclusive workforce may be steady but it is very slow. Men still account for the great majority of employees at the corporation; only about 30 percent are women, and women fill fewer than 20 percent of Google’s technical roles (Figure 8.3). The company has shown a similar lack of gender diversity in leadership roles, where women hold fewer than 25 percent of positions. Despite modest progress, an ocean-sized gap remains to be narrowed. When it comes to ethnicity, approximately 56 percent of Google employees are white. About 35 percent are Asian, 3.5 percent are Latino, and 2.4 percent are black, and of the company’s management and leadership roles, 68 percent are held by whites.7
Google is not alone in coming up short on diversity. Recruiting and hiring a diverse workforce has been a challenge for most major technology companies, including Facebook, Apple, and Yahoo (now owned by Verizon); all have reported gender and ethnic shortfalls in their workforces.
The Equal Employment Opportunity Commission (EEOC) has made available 2014 data comparing the participation of women and minorities in the high-technology sector with their participation in U.S. private-sector employment overall, and the results show the technology sector still lags.8 Compared with all private-sector industries, the high-technology industry employs a larger share of whites (68.5%), Asian Americans (14%), and men (64%), and a smaller share of African Americans (7.4%), Latinos (8%), and women (36%). Whites also represent a much higher share of those in the executive category (83.3%), whereas other groups hold a significantly lower share, including African Americans (2%), Latinos (3.1%), and Asian Americans (10.6%). In addition, and perhaps not surprisingly, 80 percent of executives are men and only 20 percent are women. This compares negatively with all other private-sector industries, in which 70 percent of executives are men and 30 percent women.
Technology companies are generally not trying to hide the problem. Many have been publicly releasing diversity statistics since 2014, and they have been vocal about their intentions to close diversity gaps. More than thirty technology companies, including Intel, Spotify, Lyft, Airbnb, and Pinterest, each signed a written pledge to increase workforce diversity and inclusion, and Google pledged to spend more than \$100 million to address diversity issues.9
Diversity and inclusion are positive steps for business organizations, and despite their sometimes slow pace, the majority are moving in the right direction. Diversity strengthens the company’s internal relationships with employees and improves employee morale, as well as its external relationships with customer groups. Communication, a core value of most successful businesses, becomes more effective with a diverse workforce. Performance improves for multiple reasons, not the least of which is that acknowledging diversity and respecting differences is the ethical thing to do.10
Adding Value through Diversity
Diversity need not be a financial drag on a company, measured as a cost of compliance with no return on the investment. A recent McKinsey & Company study concluded that companies that adopt diversity policies do well financially, realizing what is sometimes called a diversity dividend. The study results demonstrated a statistically significant relationship of better financial performance from companies with a more diverse leadership team, as indicated in Figure 8.4. Companies in the top 25 percent in terms of gender diversity were 15 percent more likely to post financial returns above their industry median in the United States. Likewise, companies in the top 25 percent of racial and/or ethnic diversity were 35 percent more likely to show returns exceeding their respective industry median.11
These results demonstrate a positive correlation between diversity and performance, rebutting any claim that affirmative action and other such programs are social engineering that constitutes a financial drag on earnings. In fact, the results reveal a negative correlation between performance and lack of diversity, with companies in the bottom 25 percent for gender and ethnicity or race proving to be statistically less likely to achieve above-average financial returns than the average companies. Non-diverse companies were not leaders in performance indicators. Positive correlations do not equal causation, of course, and greater gender and ethnic diversity do not automatically translate into profit. Rather, as this chapter shows, they enhance creativity and decision-making, employee satisfaction, an ethical work environment, and customer goodwill, all of which, in turn, improve operations and boost performance.
Diversity is not a concept that matters only for the rank-and-file workforce; it makes a difference at all levels of an organization. The McKinsey & Company study, which examined twenty thousand firms in ninety countries, also found that companies in the top 25 percent for executive and/or board diversity had returns on equity more than 50 percent higher than those companies that ranked in the lowest 25 percent. Companies with a higher percentage of female executives tended to be more profitable.12
Achieving equal representation in employment based on demographic data is the ethical thing to do because it represents the essential American ideal of equal opportunity for all. It is a basic assumption of an egalitarian society that all have the same chance without being hindered by immutable characteristics. However, there are also directly relevant business reasons to do it. More diverse companies perform better, as we saw earlier in this chapter, but why? The reasons are intriguing and complex. Among them are that diversity improves a company’s chances of attracting top talent and that considering all points of view may lead to better decision-making. Diversity also improves customer experience and employee satisfaction.
To achieve improved results, companies need to expand their definition of diversity beyond race and gender. For example, differences in age, experience, and country of residence may result in a more refined global mind-set and cultural fluency, which can help companies succeed in international business. A salesperson may know the language of customers or potential customers from a specific region or country, for example, or a customer service representative may understand the norms of another culture. Diverse product-development teams can grasp what a group of customers may want that is not currently being offered.
Resorting to the same approaches repeatedly is not likely to result in breakthrough solutions. Diversity, however, provides usefully divergent perspectives on the business challenges companies face. New ideas help solve old problems—another way diversity makes a positive contribution to the bottom line.
The Challenges of a Diverse Workforce
Diversity is not always an instant success; it can sometimes introduce workplace tensions and lead to significant challenges for a business to address. Some employees simply are slow to come around to a greater appreciation of the value of diversity because they may never have considered this perspective before. Others may be prejudiced and consequently attempt to undermine the success of diversity initiatives in general. In 2017, for example, a senior software engineer’s memo criticizing Google’s diversity initiatives was leaked, creating significant protests on social media and adverse publicity in national news outlets.13 The memo asserted “biological causes” and “men’s higher drive for status” to account for women’s unequal representation in Google’s technology departments and leadership.
Google’s response was quick. The engineer was fired, and statements were released emphasizing the company’s commitment to diversity.14 Although Google was applauded for its quick response, however, some argued that an employee should be free to express personal opinions without punishment (despite the fact that there is no right of free speech while at work in the private sector).
In the latest development, the fired engineer and a coworker filed a class-action lawsuit against Google on behalf of three specific groups of employees who claim they have been discriminated against by Google: whites, conservatives, and men.15 This is not just the standard “reverse discrimination” lawsuit; it goes to the heart of the culture of diversity and one of its greatest challenges for management—the backlash against change.
In February 2018, the National Labor Relations Board ruled that Google’s termination of the engineer did not violate federal labor law16 and that Google had discharged the employee only for inappropriate but unprotected conduct or speech that demeaned women and had no relationship to any terms of employment. Although this ruling settles the administrative labor law aspect of the case, it has no effect on the private wrongful termination lawsuit filed by the engineer, which is still proceeding.
Yet other employees are resistant to change in whatever form it takes. As inclusion initiatives and considerations of diversity become more prominent in employment practices, wise leaders should be prepared to fully explain the advantages to the company of greater diversity in the workforce as well as making the appropriate accommodations to support it. Accommodations can take various forms. For example, if you hire more women, should you change the way you run meetings so everyone has a chance to be heard? Have you recognized that women returning to work after childrearing may bring improved skills such as time management or the ability to work well under pressure? If you are hiring more people of different faiths, should you set aside a prayer room? Should you give out tickets to football games as incentives? Or build team spirit with trips to a local bar? Your managers may need to accept that these initiatives may not suit everyone. Adherents of some faiths may abstain from alcohol, and some people prefer cultural events to sports. Many might welcome a menu of perquisites (“perks”) from which to choose, and these will not necessarily be the ones that were valued in the past. Mentoring new and diverse peers can help erase bias and overcome preconceptions about others. However, all levels of a company must be engaged in achieving diversity, and all must work together to overcome resistance.
link to learning
Read this article for strategies on overcoming gendered meeting dynamics in the workplace from the Harvard Business Review.
CASES FROM THE REAL WORLD
Companies with Diverse Workforces
Texas Health Resources, a Dallas-area healthcare and hospital company, ranked No. 1 among Fortune’s Best Workplaces for Diversity and No. 2 for Best Workplaces for African Americans.17 Texas Health employs a diverse workforce that is about 75 percent female and 40 percent minority. The company goes above and beyond by offering English classes for Hispanic workers and hosting several dozen social and professional events each year to support networking and connections among peers with different backgrounds. It also offers same-sex partner benefits; approximately 3 percent of its workforce identifies as LGBTQ (lesbian, gay, bisexual, transgender, queer or questioning).
Another company receiving recognition is Marriott International, ranked No. 6 among Best Workplaces for Diversity and No. 7 among Best Workplaces for African Americans and for Latinos. African American, Latino, and other ethnic minorities account for about 65 percent of Marriott’s 100,000 employees, and 15 percent of its executives are minorities. Marriott’s president and CEO, Arne Sorenson, is recognized as an advocate for LGBTQ equality in the workplace, published an open letter on LinkedIn expressing his support for diversity and entreating then president-elect Donald Trump to use his position to advocate for inclusiveness. “Everyone, no matter their sexual orientation or identity, gender, race, religion disability or ethnicity should have an equal opportunity to get a job, start a business or be served by a business,” Sorenson wrote. “Use your leadership to minimize divisiveness around these areas by letting people live their lives and by ensuring that they are treated equally in the public square.”18
Critical Thinking
Is it possible that Texas Health and Marriott rank highly for diversity because the hospitality and healthcare industries tend to hire more women and minorities in general? Why or why not? | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/08%3A_Recognizing_and_Respecting_the_Rights_of_All/8.01%3A_Introduction.txt |
Learning Objectives
By the end of this section, you will be able to:
• Identify workplace accommodations often provided for persons with differing abilities
• Describe workplace accommodations made for religious reasons
The traditional definition of diversity is broad, encompassing not only race, ethnicity, and gender but also religious beliefs, national origin, and cognitive and physical abilities as well as sexual preference or orientation. This section examines two of these categories, religion and ability, looking at how an ethical manager handles them as part of an overall diversity policy. In both cases, the concept of reasonable accommodation means an employer must try to allow for differences among the workforce.
Protections for People with Disabilities
In the United States, the Americans with Disabilities Act (ADA), passed in 1990, stipulates that a person has a disability if he or she has a physical or mental impairment that reduces participation in “a major life activity,” such as work. An employer may not discriminate in offering employment to an individual who is diagnosed as having such a disability. Furthermore, if employment is offered, the employer is obliged to make reasonable accommodations to enable him or her to carry out normal job tasks. Making reasonable accommodations may include altering the physical workplace so it is readily accessible, restructuring a job, providing or modifying equipment or devices, or offering part-time or modified work schedules. Other accommodations could include providing readers, interpreters, or other necessary forms of assistance such as an assistive animal (Figure 8.5). The ADA also prohibits discriminating against individuals with disabilities in providing access to government services, public accommodations, transportation, telecommunications, and other essential services.19
Access and accommodation for employees with physical or mental disabilities are good for business because they expand the potential pool of good workers. It is also ethical to have compassion for those who want to work and be contributing members of society. This principle holds for customers as well as employees. Recognizing the need for protection in this area, the federal government has enacted several laws to provide it. The Disability Rights Division of the U.S. Department of Justice lists ten different federal laws protecting people with disabilities, including not only the ADA but also laws such as the Rehabilitation Act, the Air Carrier Access Act, and the Architectural Barriers Act.
link to learning
The EEOC is the primary federal agency responsible for enforcing the ADA (as well as Title VII of the Civil Rights Act of 1964, mentioned earlier in the chapter). It hears complaints, tries to settle cases through administrative action, and, if cases cannot be settled, works with the Department of Justice to file lawsuits against violators. Visit the EEOC website to learn more.
A key part of complying with the law is understanding and applying the concept of reasonableness: “An employer is required to provide a reasonable accommodation to a qualified applicant or employee with a disability unless the employer can show that the accommodation would be an undue hardship—that is, that it would require significant difficulty or expense.”20
The law does not require an employee to refer to the ADA or to “disability” or “reasonable accommodation” when requesting some type of assistance. Managers need to be able to recognize the variety of ways in which a request for an accommodation is communicated. For example, an employee might not specifically say, “I need a reasonable accommodation for my disability” but rather, “I’m having a hard time getting to work on time because of the medical treatments I’m undergoing.” This example demonstrates a challenge employers may face under the ADA in properly identifying requests for accommodation.
CASES FROM THE REAL WORLD
The ADA and Verizon Attendance Policy
Managers are usually sticklers about attendance, but Verizon recently learned an expensive lesson about its mandatory attendance policies from a 2011 class action lawsuit by employees and the EEOC. The suit asserted that Verizon denied reasonable accommodations to several hundred employees, disciplining or firing them for missing too many days of work and refusing to make exceptions for those whose absences were caused by their disabilities. According to the EEOC, Verizon violated the ADA because its no-fault attendance policy was an inflexible and “unreasonable” one-size-fits-all rule.
The EEOC required Verizon to pay \$20 million to settle the suit, the largest single disability discrimination settlement in the agency’s history. The settlement also forced Verizon to change its attendance policy to include reasonable accommodations for persons with disabilities. A third requirement was that Verizon provide regular training on ADA requirements to all mangers responsible for administering attendance policies.
Critical Thinking
• What are some specific rules that would fit within a fair and reasonable attendance policy?
• How would you decide whether an employee was taking advantage of an absenteeism policy?
Managing Religious Diversity in the Workplace
Title VII of the CRA, which governs nondiscrimination, applies the same rules to the religious beliefs (or nonbeliefs) of employees and job applicants as it does to race, gender, and other categories. The essence of the law mandates four tenets that all employers should follow: nondiscrimination, nonharassment, nonretaliation, and reasonable accommodation.
Regulations require that an employee notify the employer of a bona fide religious belief for which he or she wants protection, but the employee need not expressly request a specific accommodation. The employer must consider all possible accommodations that do not require violating the individual’s beliefs and/or practices, such as allowing time off (Figure 8.6). However, the accommodation need not pose undue hardship on the firm, in terms of either scheduling or financial sacrifice. The employer must present proof of hardship if it decides it cannot offer an accommodation.
Some cases of accommodation are based on cultural heritage rather than religion.
WHAT WOULD YOU DO?
Can Everyone’s Wishes Be Accommodated?
You are a manager in a large Texas-based oil and gas company planning an annual summer company picnic and barbecue on the weekend of June 19. The oil industry has a long tradition of outdoor barbecues, and this one is a big morale-building event. However, June 19 is “Juneteenth,” the day on which news of the Emancipation Proclamation reached slaves in Texas in 1865. Several African American employees always attend the barbecue event and are looking forward to it, but they also want to celebrate Emancipation Day, rich in history and culture and accompanied by its own official event. The picnic date cannot be easily rescheduled because of all the catering arrangements that had to be made.
Critical Thinking
• Is there a way to permit some employees to celebrate both occasions without inconveniencing others who will be attending only one?
• What would you do as the manager, keeping in mind that you do not want to offend anyone?
Reasonable accommodation may require more than just a couple of hours off to go to weekly worship or to celebrate a holiday. It may extend to dress and uniform requirements, grooming rules, work rules and responsibilities, religious expression and displays, prayer or meditation rooms, and dietary issues.
link to learning
The Sikh faith dates to roughly the fourteenth century in India. Its practitioners have made their way to many Western nations, including the United Kingdom, Canada, Italy, and the United States. Sikhs in the West have experienced discrimination due to the distinctive turbans adult males wear, which are sometimes mistaken for Islamic apparel. Men are also required to wear a dagger called a kirpan. California law permits religious observers to wear a sheathed dagger openly, but not hidden away. Watch this video showing a San Joaquin County Sheriff’s sergeant explaining the accommodation given to Sikhs to wear a kirpan in public to learn more. How comfortable are you with permitting daggers to be carried openly in the workplace?
The law also protects those who do not have traditional beliefs. In Welsh v. United States (1970), the Supreme Court ruled that any belief occupying “a place parallel to that filled by the God of those admittedly qualifying for the exception” is covered by the law.21 A nontheistic value system consisting of personal, moral, or ethical beliefs that is sincerely held with the strength of traditional religious views is deserving of protection. Protected individuals need not have a religion; indeed, if atheist or agnostic, they may have no religion at all.
Religion has become a hot-button issue for some political groups in the United States. Religious tolerance is the official national policy enshrined in the Constitution, but it has come under attack by some who want to label the United States an exclusively Christian nation.
CASES FROM THE REAL WORLD
The Abercrombie & Fitch Religious Discrimination Case
The U.S. Supreme Court, in a 2015 case involving Abercrombie & Fitch, ruled that that “an employer may not refuse to hire an applicant for work if the employer was motivated by avoiding the need to accommodate a religious practice,” and that doing so violates the prohibition against religious discrimination contained in the CRA of 1964, Title VII. According to the EEOC general counsel David Lopez, “This case is about defending the American principles of religious freedom and tolerance. This decision is a victory for our increasingly diverse society.”22
The case arose when, as part of her Muslim faith, a teenage girl named Samantha Elauf wore a hijab (headscarf) to a job interview with Abercrombie & Fitch. Elauf was denied a job because she did not conform to the company’s “Look Policy,” which Abercrombie claimed banned head coverings. Elauf filed a complaint with the EEOC alleging religious discrimination, and the EEOC, in turn, filed suit against Abercrombie & Fitch, alleging it refused to hire Elauf because of her religious beliefs and failed to accommodate her by making an exception to its “Look Policy.”
“I was a teenager who loved fashion and was eager to work for Abercrombie & Fitch,” said Elauf. “Observance of my faith should not have prevented me from getting a job. I am glad that I stood up for my rights, and happy that the EEOC was there for me and took my complaint to the courts. I am grateful to the Supreme Court for the decision and hope that other people realize that this type of discrimination is wrong and the EEOC is there to help.”23
Critical Thinking
• Does a retail clothing store have an interest in employee appearance that it can justify in terms of customer sales?
• Does it matter to you what a sales associate looks like when you shop for clothes? Why or why not? | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/08%3A_Recognizing_and_Respecting_the_Rights_of_All/8.03%3A_Accommodating_Different_Abilities_and_Faiths.txt |
Learning Objectives
By the end of this section, you will be able to:
• Explain how sexual identification and orientation are protected by law
• Discuss the ethical issues raised in the workplace by differences in sexual identification and orientation
As society expands its understanding and appreciation of sexual orientation and identity, companies and managers must adopt a more inclusive perspective that keeps pace with evolving norms. Successful managers are those who willing to create a more welcoming work environment for all employees, given the wide array of sexual orientations and identities evident today.
Legal Protections
Workplace discrimination in this area means treating someone differently solely because of his or her sexual identification or sexual orientation, which can include, but is not limited to, identification as gay or lesbian (homosexual), bisexual, transsexual, or straight (heterosexual). Discrimination may also be based on an individual’s association with someone of a different sexual orientation. Forms that such discrimination may take in the workplace include denial of opportunities, termination, and sexual assault, as well as the use of offensive terms, stereotyping, and other harassment.
Although the U.S. Supreme Court ruled in United States v. Windsor (2013) that Section 3 of the 1996 Defense of Marriage Act (which had restricted the federal interpretations of “marriage” and “spouse” to opposite-sex unions) was unconstitutional, and guaranteed same-sex couples the right to marry in Obergefell v. Hodges (2015),24 marital status has little or no direct applicability to the circumstances of someone’s employment. In terms of legal protections at work, the LGBTQ community is at a disadvantage because Title VII of the CRA does not address sexual orientation and federal law does not prohibit discrimination based on this characteristic. As of January 2018, twenty states prohibit sexual orientation discrimination in private and public workplaces and five more states prohibit sexual orientation discrimination only in public workplaces, not private (Figure 8.7).25
In those states that do not have applicable state laws, employees risk adverse employment action simply for their LGBTQ status or for being married to a same-sex partner. Although legislation to address these circumstances has been introduced in Congress in previous sessions, none of the bills has yet passed. For example, a proposed law named the Equality Act is a federal LGBTQ nondiscrimination bill that would provide protections for LGBTQ individuals in employment, housing, credit, and education. But unless and until it passes, it remains up to the business community to provide protections consistent with those provided under federal law for other employees or applicants.
Ethical Considerations
In the absence of a specific law, LGBTQ issues present a unique opportunity for ethical leadership. Many companies choose to do the ethically and socially responsible thing and treat all workers equally, for example, by extending the same benefits to same-sex partners that they extend to heterosexual spouses. Ethical leaders are also willing to listen and be considerate when dealing with employees who may still be coming to an understanding of their sexual identification.
Financial and performance-related considerations come into play as well. Denver Investments recently analyzed the stock performance of companies before and after their adoption of LGBTQ-inclusive workplace policies.26 The number of companies outperforming their peers in various industries increased after companies adopted LGBTQ-inclusive workplace policies. Once again, being ethical does not mean losing money or performing poorly.
In fact, states that have passed legislation considered anti-LGBTQ by the wider U.S. community, such as the Religious Freedom Restoration Act in Indiana or North Carolina’s H.B. 2, the infamous “bathroom bill” that would require transgender individuals to use the restroom corresponding with their birth certificate, have experienced significant economic pushback. These states have seen statewide and targeted boycotts by consumers, major corporations, national organizations such as the National Collegiate Athletic Association, and even other cities and states.27 In 2016, in response to H.B. 2, nearly seventy large U.S. companies, including American Airlines, Apple, DuPont, General Electric, IBM, Morgan Stanley, and Wal-Mart, signed an amicus (“friend of the court”) brief in opposition to the unpopular North Carolina bill.28 Indiana’s Religious Freedom Restoration Act evoked a similar backlash in 2015 and public criticism from U.S. businesses.
To assess LGBTQ equality policies at a corporate level, the Human Rights Campaign foundation publishes an annual Corporate Equality Index (CEI) of approximately one thousand large U.S. companies and scores each on a scale of 0 to 100 on the basis of how LGBTW-friendly its benefits and employment policies are (Figure 8.8). More than six hundred companies recently earned a perfect score in the 2018 CEI, including such household names as AT&T, Boeing, Coca-Cola, Gap Inc., General Motors, Johnson & Johnson, Kellogg, United Parcel Service, and Xerox.29
link to learning
Read the Human Rights Campaign’s 2018 report for more on the Human Rights Campaign’s CEI and its criteria.
Another organization tracking LGBTQ equality and inclusion in the workplace is the National LGBT Chamber of Commerce, which issues third-party certification for businesses that are majority-owned by LGBT individuals. There are currently more than one thousand LGBT-certified business enterprises across the country, although California, New York, Texas, Florida, and Georgia account for approximately 50 percent of them. Although these are all top-ranked states for new business startups in general, they are also home to multiple Fortune 500 companies whose diversity programs encourage LGBT-certified businesses to become part of their supply chains. Examples of large LGBT-friendly companies with headquarters in these states are American Airlines, JPMorgan Chase, SunTrust Bank, and Pacific Gas & Electric. | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/08%3A_Recognizing_and_Respecting_the_Rights_of_All/8.04%3A_Sexual_Identification_and_Orientation.txt |
Learning Objectives
By the end of this section, you will be able to:
• Explain why income inequality is a problem for the United States and the world
• Analyze the effects of income inequality on the middle class
• Describe possible solutions to the problem of income inequality
The gap in earnings between the United States’ affluent upper class and the rest of the country continues to grow every year. The imbalance in the distribution of income among the participants of an economy, or income inequality, is an enormous challenge for U.S. businesses and for society. The middle class, often called the engine of growth and prosperity, is shrinking, and new ethical, cultural, and economic problems are following from that change. Some identify income inequality as an ethical problem, some as an economic problem. Perhaps it is both. This section will address income inequality and the way it affects U.S. businesses and consumers.
The Middle Class in the United States
Data collected by economic researchers at the University of California show that income disparities have become more pronounced over the past thirty-five years, with the top 10 percent of income earners averaging ten times as much income as the bottom 90 percent, and the top 1 percent making more than forty times what the bottom 90 percent does.30 The percentage of total U.S. income earned by the top 1 percent increased from 8 percent to 22 percent during this period. Figure 8.9 indicates the disparity as of 2015.
The U.S. economy was built largely on the premise of an expanding and prosperous middle class to which everyone had a chance of belonging. This ideal set the United States apart from other countries, in its own eyes and those of the world. In the years after World War II, the GI Bill and returning prosperity provided veterans with money for education, home mortgages, and even small businesses, all of which helped the economy grow. For the first time, many people could afford homes of their own, and residential home construction reached record rates. Families bought cars and opened credit card accounts. The culture of the middle class with picket fences, backyard barbecues, and black-and-white televisions had arrived. Television shows such as Leave it to Beaver and Father Knows Best reflected the “good life” desired by many in this newly emerging group. By the mid-1960s, middle-class wage earners were fast becoming the engine of the world’s largest economy.
The middle class is not a homogenous group, however. For example, split fairly evenly between Democratic and Republican parties, the middle class helped elect Republican George W. Bush in 2004 and Democrat Barack Obama in 2008 and 2012. And, of course, a suburban house with a white picket fence represents a consumption economy, which is not everyone’s idea of utopia, nor should it be. More importantly, not everyone had equal access to this ideal. But one thing almost everyone agrees on is that a shrinkingmiddle class is not good for the economy. Data from the International Monetary Fund indicate the U.S. middle class is going in the wrong direction.31 Only one-quarter of 1 percent of all U.S. households have moved up from the middle- to the upper-income bracket since 2000, while twelve times that many have slid to the lower-income bracket. That is a complete reversal from the period between 1970 and 2000, when middle-income households were more likely to move up than down. According to Business Insider, the U.S. middle class is “hollowing out, and it’s hurting U.S. economic growth.”32
Not only has the total wealth of middle-income families remained flat (Figure 8.10) but the overall percentage of middle-income households in the United States has shrunk from almost 60 percent in 1970 to only 47 percent in 2014, a very significant drop. Because consumers of comfortable means are a huge driver of the U.S. economy, with their household consumption of goods and services like food, energy, and education making up more than two-thirds of the nation’s gross domestic product (GDP), the downward trend is an economic challenge for corporate America and the government. Business must be part of the solution. But exactly what can U.S. companies do to help address income inequality?
Addressing Income Inequality
Robert Reich was U.S. Secretary of Labor from 1993 to 1997 and served in the administrations of three presidents (Gerald Ford, Jimmy Carter, and Bill Clinton). He is one of the nation’s leading experts on the labor market and the economy and is currently the chancellor’s professor of Public Policy at University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. Reich recently told this story: “I was visited in my office by the chairman of one of the country’s biggest high-tech firms. He wanted to talk about the causes and consequences of widening inequality and the shrinking middle class, and what to do about it.” Reich asked the chairman why he was concerned. “Because the American middle class is the core of our customer base. If they can’t afford our products in the years ahead, we’re in deep trouble.”33
Reich is hearing a similar concern from a growing number of business leaders, who see an economy that is leaving out too many people. Business leaders know the U.S. economy cannot grow when wages are declining, nor can their businesses succeed over the long term without a growing or at least a stable middle class. Other business leaders, such as Lloyd Blankfein, CEO of Goldman Sachs, have also said that income inequality is a negative development. Reich quoted Blankfein: “It is destabilizing the nation and is responsible for the divisions in the country . . . too much of the GDP over the last generation has gone to too few of the people.”34
Some business leaders, such as Bill Gross, chair of the world’s largest bond-trading firm, suggest raising the federal minimum wage, currently \$7.25 per hour for all employers doing any type of business in interstate commerce (e.g., sending or receiving mail out of state) or for any company with more than \$500,000 in sales. Many business leaders and economists agree that a higher minimum wage would help address at least part of the problem of income inequality; industrialized economies function best when income inequality is minimal, according to Gross and others who advocate for policies that bring the power of workers and corporations back into balance.35 A hike in the minimum wage affects middle-class workers in two ways. First, it is a direct help to those who are part of a two-earner family at the lower end of the middle class, giving them more income to spend on necessities. Second, many higher-paid workers earn a wage that is tied to the minimum wage. Their salaries would increase as well.
Without congressional action to raise the minimum wage, states have taken the lead, along with businesses that are voluntarily raising their own minimum wage. Twenty-nine states have minimum wages that exceed the federal rate of \$7.25 per hour. Costco, T.J. Maxx, Marshalls, Ikea, Starbucks, Gap, In-and-Out Burger, Whole Foods, Ben & Jerry’s, Shake Shack, and McDonalds have also raised minimum wages in the past two years. Target recently announced a rise in its minimum wage to eleven dollars per hour, and banks, including Wells Fargo, PNC Financial Services, and Fifth Third Bank, announced a fifteen-dollar minimum wage.36
link to learning
Go to the National Conference of State Legislatures website for information about various laws in each state and to look up the minimum wage law in your state.
The American Sustainable Business Council, in conjunction with Business for a Fair Wage, surveyed more than five hundred small businesses, and the results were surprising. A clear majority (58%–66%, depending on region) supported raising the minimum wage to at least ten dollars per hour.37 Business owners were not simply being ethical; most understand that their business would benefit from an increase in consumers’ purchasing power, and that this, in turn, would help the general economy. Frank Knapp, CEO of the South Carolina Small Business Chamber of Commerce representing five thousand business owners, said a higher minimum wage “will put more money in the hands of 300,000 South Carolinians who make less than ten dollars per hour and they will spend it here in our local economies. This minimum wage increase will also benefit another 150,000 employees who will have their wages adjusted. The resulting net \$500 million increase in state GDP will be good for small businesses and good for the economy of South Carolina.”38
In addition to paying a higher wage, businesses can help workers move to, or stay in, the middle class in other ways. For decades, some companies have hired many full-time workers as independent contractors because it saves them money on a variety of employee benefits they do not have to offer as a result. However, that practice shifts the burden to the workers, who now have to pay the full cost of their health insurance, workers’ compensation, unemployment benefits, time off, and payroll taxes. A recent Department of Labor study indicates that employer costs for employee compensation averaged \$35.64 per hour worked in September 2017; wages and salaries averaged \$24.33 per hour worked and accounted for 68 percent of these costs, whereas benefit costs averaged \$11.31 and accounted for the remaining 32 percent.39 That means if employees on the payroll were paid as independent contractors, their pay would effectively be about one-third less, assuming they purchased benefits on their own. The 30 percent difference companies save by hiring independent contractors is often the margin between being in the middle class and falling below it.
ETHICS ACROSS TIME AND CULTURES
Falling Out of the Middle Class
Imagine a child living in a house with no power for lights, heat, or cooking, embarrassed to invite friends over to play or study, and not understanding what happened to a once-normal life. This is a story many middle-class families in the United States think could happen only to someone else, never to them. However, an HBO documentary entitled American Winter suggests the opposite is true; many seemingly solid middle-class families can slip all too easily into the lower class, into poverty, in houses that are dark with empty refrigerators.
The film, set in Portland, Oregon, tells the story of an economic tragedy. Families that were once financially stable are now barely keeping their heads above water. A needed job was outsourced or given to an independent contractor, or a raise failed to come even as necessities kept getting more expensive. The families had to try to pay for healthcare or make a mortgage payment when their bank account was overdrawn. Once-proud middle-class workers talk about the shame of having to ask friends for help or turn to public assistance as a last resort. The fall of the U.S. middle class is more than a line on an economic chart; it is a cold reality for many families who never saw it coming.
Critical Thinking
• Does a company have an ethical duty to find a balance between remaining profitable and paying all workers a decent living wage? Why or why not? Who decides what constitutes a fair wage?
• How would you explain to a board of directors your decision to pay entry-level workers a higher wage than required by law?
Yet sympathy for raising the minimum wage at either the federal or state level to sustain the middle class or reduce poverty in general has not been unanimous. Indeed, some economists have questioned whether a positive correlation exists between greater wages and a lowering of the poverty rate. Representative of such thought is the work of David Neumark, an economist at the University of California, Irvine, and William L. Wascher, a long-time economic researcher on the staff of the Board of Governors of the Federal Reserve System. They argue that, however well-meaning such efforts might be, simply raising the minimum wage can be counterproductive to driving down poverty. Rather, they maintain, the right calculus for achieving this goal is much more complex. As they put it, “we are hard-pressed to imagine a compelling argument for a higher minimum wage when it neither helps low-income families nor reduces poverty.” Instead, the federal and state governments should consider a series of steps, such as the Earned Income Tax Credit, that would be more effective in mitigating poverty.40
Pay Equity as a Corollary of Income Equality
The issue of income inequality is of particular significance as it relates to women. According to the World Economic Forum (WEF), gender inequality is strongly associated with income inequality.41 The WEF studied the association between the two phenomena in 140 countries over the past twenty years and discovered they are linked virtually everywhere, not only in developing nations. The issue of pay discrimination is addressed elsewhere in this textbook; however, the issue merits mention here as a part of the bigger picture of equality in the workplace. Adding to the disparity in income between men and women is the reality that many women are single mothers with dependent children and sometimes grandchildren. Hence, any reduction in their earning power has direct implications for their dependents, too, constituting injustice to multiple generations.
According to multiple studies, including those by the American Association of University Women and the Pew Research Center, on average, women are paid approximately 80 percent of what men are paid.42 Laws that attempt to address this issue have not eradicated the problem. A recent trend is to take legislative action at the state rather than the federal level. A New Jersey law, for example, was named the Diane B. Allen Equal Pay Act to honor a retired state senator who experienced pay discrimination.43 It will be the strongest such law in the country, allowing victims of discrimination to seek redress for up to six years of underpayment, and monetary damages for a prevailing plaintiff will be tripled.
The most significant part of the law, however, is a seemingly small change in wording that will have a big impact. Rather than requiring “equal pay for equal work,” as does the federal law and most state laws aimed at the gender wage gap, the Diane B. Allen Equal Pay Act will require “equal pay for substantially similar work.” This means that if a New Jersey woman has a different title than her male colleague but performs the same kinds of tasks and has the same level of responsibility, she must be paid the same. The new law recognizes that slight differences in job titles are sometimes used to justify pay differences but in reality are often arbitrary.
Minnesota recently passed a similar law, but it applies only to state government employees, not private-sector workers. It mandates that women be paid the same for comparable jobs and analyzes the work performed on the basis of how much knowledge, problem solving, and responsibility is required, and on working conditions rather than merely on job titles.
Ethical business managers will see this trend as an effort to address an ethical issue that has existed for well over a century and will follow the lead of states such as New Jersey and Minnesota. A company can help solve this problem by changing the way it uses job titles and creating a compensation system built on the ideas behind these two laws, which focus on job characteristics and not titles. | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/08%3A_Recognizing_and_Respecting_the_Rights_of_All/8.05%3A_Income_Inequalities.txt |
Learning Objectives
By the end of this section, you will be able to:
• Explain rising concerns about corporate treatment of animals
• Explain the concept of agribusiness ethics
• Describe the financial implications of animal ethics for business
Ethical questions about our treatment of animals arise in several different industries, such as agriculture, medicine, and cosmetics. This section addresses these questions because they form part of the larger picture of the way society treats all living things—including nonhuman animals as well as the environment. All states in the United States have some form of laws to protect animals; some violations carry criminal penalties and some carry civil penalties. Consumer groups and the media have also applied pressure to the business community to consider animal ethics seriously, and businesses have discovered money to be made in the booming business of pets. Of course, as always, we should acknowledge that culture and geography influence our understanding of ethical issues at a personal and a business level.
A Brief History of the Animal Rights Movement
Rhode Island, along with Boulder, Colorado, and Berkeley, California, led the way in enacting legislation recognizing individuals as guardians, not owners, of their animals, thus giving animals legal status beyond being just items of property. Many U.S. colleges now teach courses on animal rights law, there is strong support for granting fundamental legal rights to animals, and some attorneys, scientists, and ethicists dedicate their careers to animal rights.
The animal movement started in the late nineteenth century when the American Society for the Prevention of Cruelty to Animals (ASPCA) was formed, along with the American Humane Association. The American Welfare Institute and the Humane Society of the United States (HSUS) were established in the 1950s. The first federal animal protection law, the Humane Slaughter Act, was passed in the 1950s to avoid unnecessary suffering to farm animals (ten billion of which are killed every year). The most important U.S. law forbidding cruelty to animals in laboratory settings was enacted in 1966; the Animal Welfare Act requires basic humane conditions to be maintained for animals in testing facilities. Finally, in the 1970s and 1980s, the modern animal rights social movement emerged. It has led to an increased awareness of animal ethics by consumers and businesses.
However, despite significant progress, research using animals for product testing continues to be controversial in the United States, particularly because improved technology has offered humane and effective alternatives. The use of animals in biomedical research has drawn slightly less negative reaction than in consumer product testing, because of the more critical nature of the research. Though animal welfare laws have ameliorated some of the pain of animals used in biomedical research, ethical concerns remain, and veterinarians and physicians are demanding change, as are animal rights groups and policy and ethics experts. Increased integration of ethics in business conduct is operating alongside the desire to recognize animal rights, the entitlement of nonhuman animals to ethical treatment.
The Ethics of What We Eat
Concern for the welfare of animals beyond pets brings us to the agribusiness industry. This is where groups such as the ASPCA and HSUS have been particularly active. Agribusiness is a huge industry that provides us with the food we eat, including plant-based and animal-based foodstuffs. The industry has changed significantly over the past century, evolving from one consisting primarily of family and/or small businesses to a much larger one dominated mostly by large corporations. Aspects of this business with relevant and interrelated ethical questions range from ecology, animal rights, and economics to food safety and long-term sustainability (Figure 8.11). To achieve a high level of sustainability in the world’s food supply chain, all stakeholders—the political sector, the business sector, the finance sector, the academic sector, and the consumer—must work in concert to achieve an optimal result, and a cost-benefit analysis of ethics in the food industry should include a recognition of all their concerns.
Experts predict that for us to meet the food needs of the world’s population, we will need to double food production over the next fifty years. Given this, a high priority in the agribusiness industry ought to be to meet this demand for food at a reasonable price with products that are not a threat to human health and safety, animal health, or the limited resources in Earth’s environment. However, to do so requires attention to factors such as soil and surface water conservation and protection of natural land and water areas. Furthermore, the treatment of animals by everyone in the livestock chain (e.g., livestock farmers, dealers, fish farmers, animal transporters, slaughterhouses) must be appropriate for a society with high legal and ethical standards.
The food chain can be truly sustainable only when it safeguards the social welfare and living environment of the people working in it. This means eliminating corruption, human rights violations (including forced labor and child labor), and poor working conditions. We must also encourage and empower consumers to make informed choices, which includes enforcing labeling regulations and the posting of relevant and accurate dietary information.
Finally, an analysis of the food supply chain must also include an awareness of people’s food needs and preferences. For example, the fact that growing numbers of consumers are adopting vegetarian, vegan, gluten-free, or non–genetically modified organism diets is now apparent at responsive restaurants, grocery stores, and employer-provided cafés. For many, the ethical treatment of animals remains a philosophic issue; however, some rules about what foods are morally acceptable and how they are prepared for consumption (e.g., halal or kosher) are also grounded in faith, so animal rights have religious implications, too.
All in all, consumers’ growing ethical sensitivity about what we eat could ultimately transform agribusiness. More acreage might be assigned to growing fruits and vegetables relative to those given over to livestock grazing, for instance. Or revelations about slaughterhouse processes may reduce our acceptance of the ways in which meat is processed for consumption. The economic consequences for agribusiness of such changes are difficult to underestimate.
link to learning
Peter Singer is an Australian-born philosopher who has teaching appointments at Princeton University and Monash University in Australia. His book Animal Liberation, originally published in 1975 but revised many times since, serves as a sort of bible for the animal rights movement. Yet Singer is highly controversial because he argues that some humans have fewer cognitive skills than some animals. Therefore, if we determine what we eat on the basis of sentience (the ability to think and/or feel pain), then many animals we eat should be off limits. Watch Singer’s talk, “The Ethics of What We Eat,” which was recorded at Williams College in December 2009 as an introduction to Singer’s philosophy.
The Use of Animals in Medical and Cosmetic Research
Viewpoints about animals used in medical research are changing in very significant ways and have resulted in a variety of initiatives seeking alternatives to animal testing. As an example, in conjunction with professionals from human and veterinary medicine and the law, the Yale University Hastings Program in Ethics and Health Policy, a bioethics research institute, is seeking alternatives to animal testing that focus on animal welfare.
Animals such as monkeys and dogs are used in medical research ranging from the study of Parkinson disease to toxicity testing and studies of drug interactions and allergies. There is no question that medical research is a valuable and important practice. The question is whether the use of animals is a necessary or even best practice for producing the most reliable results. Alternatives include the use of patient-drug databases, virtual drug trials, computer models and simulations, and noninvasive imaging techniques such as magnetic resonance imaging and computed tomography scans.44 Other techniques, such as microdosing, use humans not as test animals but as a means to improve the accuracy and reliability of test results. In vitro methods based on human cell and tissue cultures, stem cells, and genetic testing methods are also increasingly available.
As for consumer product testing, which produces the loudest outcry, the Federal Food, Drug, and Cosmetic Act does not require that animal tests be conducted to demonstrate the safety of cosmetics. Rather, companies test formulations on animals in an attempt to protect themselves from liability if a consumer is harmed by a product. However, a significant amount of new research shows that consumer products such as cosmetics can be accurately tested for safety without the abuse of animals. Some companies may resist altering their methods of conducting research, but a growing number are now realizing that their customers are demanding a change.
Regulating the Use of Animals in Research and Testing
Like virtually every other industrialized nation, the United States permits medical experimentation on animals, with few limitations (assuming sufficient scientific justification). The goal of any laws that exist is not to ban such tests but rather to limit unnecessary animal suffering by establishing standards for the humane treatment and housing of animals in laboratories.
As explained by Stephen Latham, the director of the Interdisciplinary Center for Bioethics at Yale,45 possible legal and regulatory approaches to animal testing vary on a continuum from strong government regulation and monitoring of all experimentation at one end, to a self-regulated approach that depends on the ethics of the researchers at the other end. The United Kingdom has the most significant regulatory scheme, whereas Japan uses the self-regulation approach. The U.S. approach is somewhere in the middle, the result of a gradual blending of the two approaches.
A movement has begun to win legal recognition of chimpanzees as the near-equivalent of humans, therefore, as “persons” with legal rights. This is analogous to the effort called environmental justice, an attempt to do the same for the environment (discussed in the section on Environmental Justice in Three Special Stakeholders: Society, the Environment, and Government). A nonprofit organization in Florida, the Nonhuman Rights Project, is an animal advocacy group that has hired attorneys to present a theory in court that two chimpanzees (Tommy and Kiko) have the legal standing and right to be freed from cages to live in an outdoor sanctuary (Figure 8.12). In this case, the attorneys have been trying for years to get courts to grant the chimps habeas corpus (Latin for “you shall have the body”), a right people have under the U.S. Constitution when held against their will. To date, this effort has been unsuccessful.46 The courts have extended certain constitutional rights to corporations, such as the First Amendment right to free speech (in the 2010 Citizens United case). Therefore, some reason, a logical extension of that concept would hold that animals and the environment have rights as well.
In cosmetic testing, the United States has relatively few laws protecting animals, whereas about forty other nations have taken more direct action. In 2013, the European Union banned animal testing for cosmetics and the marketing and sale of cosmetics tested on animals. Norway and Switzerland passed similar laws. Outside Europe, a variety of other nations, including Guatemala, India, Israel, New Zealand, South Korea, Taiwan, and Turkey, have also passed laws to ban or limit cosmetic animal testing. U.S. cosmetic companies will not be able to sell their products in any of these countries unless they change their practices. The Humane Cosmetics Act has been introduced but not yet passed by Congress. If enacted, it would end cosmetics testing on animals in the United States and ban the import of animal-tested cosmetics.47 However, in the current antiregulatory environment, passage seems unlikely.
CASES FROM THE REAL WORLD
Beagles Freedom Project
Beagles are popular pets because—like most dogs—they are people pleasers, plus they are obedient and easy to care for (Figure 8.13). These same qualities make them the primary breed for animal testing: ninety-six percent of all dogs used in testing are beagles, leading animal-rights groups like the Beagle Freedom Project to make rescuing them a priority.48 Even animal activists have to compromise to make progress, however, as the director of Beagle Freedom explains: “We have a policy position against animal testing. We don’t like it philosophically, scientifically, even personally. . . . But that doesn’t mean we can’t find common ground, a common-sense solution, to bridge two sides of a very controversial and polarizing debate, which is animal testing, and find this area in the middle where we can get together to help animals.”49
Dogs used as subjects in laboratory experiments live in stacked metal cages with only fluorescent light, never walk on grass, and associate humans with pain. In toxicology testing, they are exposed to toxins at increasing levels to determine at what point they become ill. Before a beagle can be rescued, the laboratory has to agree to release it, which can be a challenge. If the laboratory is willing, the Beagle Freedom Project still has to negotiate, which usually means paying for all costs, including veterinary care and transportation, and absolving the laboratory of all liability, and then find the dog a home.
Alternatives to testing on beagles include three-dimensional human-skin-equivalent systems and a variety of advanced computer-based models for measuring skin irritation, for instance. According to the New England Anti-Vivisection Society, nonanimal tests are often more cost-effective, practical, and expedient; some produce results in a significantly shorter time.50
Critical Thinking
Why have U.S. cosmetics companies continued to use beagles for testing when there are more humane alternatives at lower costs?
According to the Humane Society of the United States, a more realistic alternative approach is to develop nonanimal tests that could provide more human safety data, including information about cancer and birth defects related to new products. Consumer pressure can also influence change. If consumer purchases demonstrate a preference for cruelty-free cosmetics and support ending cosmetics animal testing, businesses will get the message. Almost one hundred companies have already ceased testing cosmetics on animals, including The Body Shop, Burt’s Bees, E.L.F. Cosmetics, Lush, and Tom’s of Maine. Lists of such firms are maintained by People for the Ethical Treatment of Animals and similar organizations.51
link to learning
Cruelty Free International is an organization working to end animal experiments worldwide. It provides information about products that are not tested on animals in an effort to help consumers become more aware of the issues. Take a look at the Cruelty Free International website to learn more.
Companies will be wise to adapt to the increasing level of public awareness and consumer expectations, not least because U.S. culture now incorporates pets in almost every aspect of life. Dogs, cats, and other animals function as therapy pets for patients and those experiencing stress; an Uber-style dog service will bring dogs to work or school for a few minutes of companionship. Pets visit hospitals and act as service animals, appearing in restaurants, campuses, and workplaces where they would have been prohibited as recently as ten years ago. According to the American Pet Products Association (APPA), a trade group, two-thirds of U.S. households own a pet, and pet industry sales have tripled in the past fifteen years.52 The APPA estimates U.S. spending on pets will reach almost \$70 billion a year by 2018.
“People are fascinated by pets. We act and spend on them as if they were our children,” says New York University sociology professor Colin Jerolmack, who studies animals in society.53 As people increasingly want to include pets in all aspects of life, new and different industries have emerged and will continue to do so, such as tourism centered on the presence of pets and retail opportunities such as health insurance for animals, upscale stores, and new products specifically tailored for pets. With interest in pets at an all-time high, businesses cannot ignore the trend, either in terms of revenue to be earned or in terms of the ethical treatment of their fellow animals in laboratories.
8.07: Summary
Section Summaries:
8.1 Diversity and Inclusion in the Workforce
A diverse workforce yields many positive outcomes for a company. Access to a deep pool of talent, positive customer experiences, and strong performance are all documented positives. Diversity may also bring some initial challenges, and some employees can be reluctant to see its advantages, but committed managers can deal with these obstacles effectively and make diversity a success through inclusion.
8.2 Accommodating Different Abilities and Faiths
To accommodate religious beliefs, the absence of formal religious faith, or disabilities, businesses should make every reasonable accommodation they can to allow workers to contribute to the company. This may require scheduling flexibility, the use of special devices, or simply an understanding manager.
8.3 Sexual Identification and Orientation
Although about half the states prohibit sexual orientation discrimination in private and public workplaces and a few do so in public workplaces only, federal law does not. Successful companies will not only follow the applicable law but also develop ethical policies to send a clear message that they are interested in job skills and abilities, not sexual orientation or personal life choices.
8.4 Income Inequalities
Income inequality has grown sharply while the U.S. middle class, though vital to economic growth, has continued to shrink. Currently, the federal minimum wage is \$7.25 per hour, and many states simply follow the federal lead in establishing their own minimums. Though some economists dispute the existence of a simple, direct link between a shrinking middle class and governmental failure to raise the minimum wage at a sufficiently rapid pace, no one denies that businesses themselves could take the lead here by paying a higher minimum wage. Companies also can commit to hire workers as employees rather than as independent contractors and pay the cost of their benefits, and to pay women the same as men for similar work.
8.5 Animal Rights and the Implications for Business
Mainstream businesses from pharmaceutical and medical companies to grocers and restaurants must all consider the growing public awareness of the ethical treatment of nonhuman animals. This evolving concern has particular consequences for agribusiness in terms of what creatures we consider appropriate to cultivate and eat. Cosmetic companies are increasingly subject to legislative mandates in the global marketplace and to consumer pressure at home to adopt ethical policies with regard to animal testing. An aware consuming public can continue to force improvements in our treatment of animals.
Key Terms
animal rights
the entitlement of nonhuman animals to ethical treatment
diversity dividend
the financial benefit of improved performance resulting from a diverse workforce
inclusion
the engagement of all employees in the corporate culture
income inequality
the unequal distribution of income among the participants of an economy
reasonable accommodation
a change or adjustment to a job or other aspect of the work environment that permits an employee with a disability or other need to perform that job
undue hardship
a difficulty or expense to the firm significant enough that reasonable accommodation may not be required | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/08%3A_Recognizing_and_Respecting_the_Rights_of_All/8.06%3A_Animal_Rights_and_the_Implications_for_Business.txt |
As consumers, employees, and community members, we see everywhere the extent to which business can contribute to either social well-being or harm. Some career paths invite special scrutiny because of their influential role in society and the extent to which they serve as magnets for business students. Friends and critics of these professions have studied the unique ethical issues they raise and individuals who pursue careers in these fields should give careful consideration to these findings to decide if the benefits outweigh the potential downsides.
Entrepreneurship, for instance, offers the opportunity to construct your own business in the hope of profit, but at some personal and financial cost. Are the potential gains being overplayed when, in fact, most entrepreneurial businesses fail? Advertising is the driver of sales, but are its claims honest and its delivery platforms, including social media, acting in good faith? Do they exert undue or biased influence on the gullible and the young? Insurance is necessary, but what is the proper and ethical role of property insurers, for example, in the face of increasingly dangerous natural disasters? Health care in the United States is extraordinarily expensive, especially compared with that in other industrialized nations, and access is too often limited to those with means. Should quality health care be a right for all rather than a privilege for the few?
9.02: Entrepreneurship and Start-Up Culture
Learning Objectives
By the end of this section, you will be able to:
• Identify ethical challenges relating to entrepreneurial start-ups
• Describe positive and negative effects of growth in a start-up
• Discuss the role of the founder in instilling an ethical culture
An entrepreneur is a business leader willing to risk starting a new company and offering a product or service he or she hopes will be sustainable and permit the firm to prosper. The entrepreneur may have to find the money required for this venture and typically draws on business experience gained by working for others first. Entrepreneurship often requires hard work, but the potential for economic payoff and career satisfaction appeals to many.
The Risks of Entrepreneurship
Although the risk of failure associated with starting a business is real and even high, we hear much in the media about success stories and little about those entrepreneurs who crash and burn. Perhaps the allure of entrepreneurship inevitably outshines any mention of the downside. Still, start-ups impose a higher than normal degree of risk, and we turn to the evidence for this now.
What is the specific nature of entrepreneurial risk? Different studies yield different results, but business consultant Patrick Henry reported that “75 percent of venture-backed startups fail.” Henry added that “this statistic is based on a Harvard Business School study by Shikhar Ghosh. In a study by Statistical Brain, ‘Startup Business Failure Rate by Industry,’ the failure rate of all U.S. companies after five years was over 50 percent, and over 70 percent after ten years.”1
This figure might be enough to chill the enthusiasm of any would-be entrepreneur who believes an exciting or novel concept is enough to support a successful company with a minimal amount of time and effort and a great deal of other people’s money. Still, the ranks of start-ups expand prodigiously each month in the United States.
Even start-ups that beat the odds financially need to be watchful for a different sort of pitfall, an ethical failure that can be nourished by the very strengths that allow a company to get off the ground. That pitfall is the hubris or excessive pride that may characterize some entrepreneurs, particularly after they have had some initial success. Uber, an application-based, ride-hailing service, was founded in San Francisco by Travis Kalanick and Garrett Camp in 2009. If ever an idea matched the success potential of smartphones, it was this one. Offering a cheaper and more convenient service than hailing a cab on city streets, Uber was valued at \$70 billion in 2017 and operated, with varying degrees of success, in seventy countries at that point. However, the corporate culture, especially at headquarters, left many observers aghast in early 2017 after an Uber engineer, Susan Fowler, blogged about her experiences there. Other employees substantiated much of her account, revealing an atmosphere rife with misogyny, homophobia, and sexual harassment.
This culture was permitted—even fostered—by Kalanick, who reigned unchecked for several years over what the New York Timeslabeled an “aggressive, unrestrained workplace culture.”2 Muted grumblings from quarters within the company never received much attention outside the firm, allowing Kalanick to become a high-flying role model for would-be entrepreneurs who wished to emulate his success. A reckoning finally arrived when Uber’s board of directors asked him to resign his position as chief executive officer in June 2017.
Yet the workplace culture that prevailed during his years at the company was not unique to Uber. Many firms have experienced it. Holding destructive egos in check is an ethical challenge at many successful businesses, particularly at hard-riding start-ups. Founders and their start-up teams need to be aware of how deeply their attitudes toward others; their visible treatment of employees, customers, and clients; and their display of fairness will come to shape the company they are building. It is not enough for the founders to hypothesize, “we’ll get around to establishing the right protocols after we’re solvent.” Nor is it adequate to insist that standards of courteous business practice will naturally emerge on their own. An initial culture either of ethics or its absence will set a tone from the first day of business. If the founders believe these niceties are not required of them owing to their genius or confidence, such arrogance will displace ethics as a best practice. To believe otherwise is self-deception.
Why Successful Start-Ups Change as They Grow
A legendary example of a start-up that still inspires many today is the Hewlett-Packard Corporation (HP). Its origins lie in the efforts of Bill Hewlett and David Packard, two Stanford University classmates in the 1930s. Much like members of a garage band, they started their company in a real garage, and the firm has outgrown its humble beginnings many times over (Figure 9.2).
Start-ups are exciting. Many of their founders, like the late Steve Jobs of Apple, attain near-rock star status, and the companies cangenerate enormous profit. They allow many to do what they have always wanted to do and be their own bosses. Yet we often overlook the fact that even some of the most successful entrepreneurs experience many failures before they succeed, and long hours of hard work are typically required even for these failures. Smart entrepreneurs learn from their failures, but each lesson can be painful, frustrating, and time consuming.
A unique personality is required to weather the stresses and strains of a start-up, and it is a personality that tolerates much personal deprivation as it pursues the perceived highest goal of all, success for the firm, no matter what personal or collective costs might be entailed. The culture of entrepreneurialism allows for many business leaders and their staffs to be deprived of a portion of their humanity along the way to success. Thus, a preeminent ethical consideration is whether the result justifies this cost. At the very least, determined entrepreneurs must be advised of these possible sacrifices. They constitute the collateral damage of entrepreneurial dreams that any ambitious start-up founder should contemplate. Will one emerge at the end of the process as the sort of person one most wishes to be?
Even if a start-up becomes what its founders wish it to be—astronomically successful—inevitably it will change as it grows, acquires new locations, and hires more employees. These changes may eventually produce an organization with added layers—essentially, a hardened bureaucracy that slows down and complicates the management process. The company may no longer make essential decisions with the speed and nimbleness that once were possible. In short, success for a start-up is often accompanied by the risk of becoming, over time, exactly the traditional business structure its founders once rejected. So the founders of an entrepreneurial shop, and their successors, must guard against change that radically alters the original spirit of innovation and the free and rapid flow of information, even as the company grows. No business leader seeks bureaucracy, but it typically accompanies growth within any organization.
Particular problems that arise out of bureaucratization are additional layers of management, more codified procedures, and internal obstructions that surface as a business attempts to capitalize on its initial success. As more employees are added to the mix, the original team’s sense of common purpose can become diluted.
Max Weber (1864–1920), the German academic, economist, and sociologist, appreciated the consequences of bureaucracy years ago. In Wirtschaft und Gesellschaft [Economy and Society], published posthumously in 1925, he pointed out, “in the private economy, [bureaucracy emerges] only in the most advanced institutions of capitalism.”3 Weber cemented the link between bureaucracy and capitalism further: “The development of the money economy [emphasis is Weber’s] . . . is a presupposition of bureaucracy. Today it not only prevails but is predominant.”4
Because start-ups constitute an “advanced” feature of capitalism, and because bureaucracy presupposes a “money economy,” Weber prophesied that agile start-ups would be ripe for bureaucratization as they grow and age. Finally, he included this acknowledgement of the permanence of bureaucracy: “Once it is firmly established, bureaucracy is among those social structures which are the hardest to destroy.”5
More recently, Michael A. Lutzker confirmed Weber’s testimony on the inevitability of bureaucracy: “The administrative function has of course been a pervasive element of all societies, ancient, medieval, and modern, but Weber was among the first to recognize the distinctive character of bureaucracy in the modern era.”6
Simply put, the very same success that permits a start-up to flourish often produces bureaucratic structures that chip away at the free-flowing camaraderie that allowed a handful of founders to act instantly and with one mind. As the staff expands, employees’ ranks become more defined, titles and hierarchies appear, and individual achievements become harder to spot. This is what changes within a successful start-up, and it moves the company away from the more congenial atmosphere that characterized it at its outset. An original small partnership often becomes a corporate behemoth, and it takes on many of the attributes of those cubicle workplaces that frequently inspired its founders to strike out on their own in the first place.
All the better, then, if ethical practices that permit coworkers to bond as colleagues with a sense of commitment to each other and to their customers or clients emerge through a company’s trial-and-error experience at the outset. Only if the founders and initial staff emphasize treating all stakeholders with honesty, courtesy, and respect will the new firm stand a chance of indelibly cementing ethics into its operating matrix.
Entrepreneurial Culture
A fairly common characteristic of successful start-ups is charismatic, driven founders with take-no-prisoner competitive mentalities, as was illustrated earlier in this chapter in the example of Kalanick and the leadership values at Uber. After all, it takes a thick skin and powerful ego to get through the inevitable disappointments that confront a start-up leader. Often, however, even when these self-assured personalities evade the most egregious behavior of a Kalanick, they still remain very difficult for others to abide. Many companies discover that a different leadership ethos is necessary as they grow. Could entrepreneurs still succeed if they also embraced a humanistic leadership style at the outset, or would this invariably undermine the already low initial odds of success? It is a difficult problem with which many firms wrestle. Dedicated employees may be put off by demanding leaders who are harsh, giving little back to loyal workers even after achieving success. New employees may decide the working climate is less congenial than they anticipated and simply leave. This turnstile effect of workers voting on management with their feet constitutes an ethical judgment of repugnant leadership at the top.
link to learning
Although no single set of traits identifies the ideal start-up leader, a demanding, driven nature is a fairly common characteristic. Consider these brief profiles of entrepreneurs: first, a profile on Walt Disney and then a profile on Steve Jobs as well as this video showing a contrasting view from Kerrie Laird at Vodafone.
After watching the videos, consider this thought experiment: Suppose the cult of the charismatic—but dogmatic—entrepreneurial leader such as Walt Disney or Steve Jobs were replaced with one steeped in a commitment to employee empowerment that Kerrie Laird claims for Vodafone? Could this change the culture at start-ups? If it could, do you believe that change would be for the better or worse?
These observations identify what may be unique to entrepreneurial culture. This is a combination of personality and management style often identified with those business leaders who strike out on their own, bring a start-up to life, and shape its initial business practices and culture on the job. If the enterprise is successful, the principles and philosophy of the founder become enshrined in the lore of the company, so that long after his or her departure, succeeding leaders find themselves beholden to the management philosophy exemplified from the early days of the firm.7 As you seek the right leadership style to implement on the job, begin by asking precisely what kind of leader you would prefer to work for if you were not the boss. The answer you provide may very well be the best model to follow as you develop your own leadership personality, whether it is at a start-up or a more established company.
The first employees of a start-up realize what is at stake as the company tiptoes into new entrepreneurial waters. The founder may be the boss, but those associated with him or her sense a collaborative spirit that directly joins them to the founder as well as each other. There can be a genuine fraternity among those who have been with the firm since day 1 or shortly thereafter. Founding members of an entrepreneurial business are also often willing to undergo the strains and rigors attached to a start-up in return for an ownership stake in the company that allows them to profit handsomely from its later growth and success.
Newer staff, however, may not share this mindset. They may simply be seeking a secure position with a growing business rather than a chance to get in on the ground floor of a risky start-up. They will not necessarily have the tolerance for the demanding hours, chaos, and abrasive personalities that can characterize the early days of an enterprise. Can entrepreneurial founders shape a company’s culture so it can accommodate talented employees who are looking for a corporate culture that supports some work–life balance?
Consider also the ethical practices of an entrepreneur and the ethical expectations of employees. Suppose that one of the distinguishing features woven into the fabric of the start-up is the respect extended to customers or clients. An entrepreneur typically promises always to hold customers in the highest regard, never lie to them, and serve them well. Furthermore, suppose this entrepreneur successfully instills this same ethos among all employees from the outset. Respect for customers is intended to become a distinguishing feature of the business; even if it causes monetary loss to the company, this entrepreneur will not cheat a client or misrepresent the company’s services. Finally, presume that this ethos is embedded into the culture of the company while it is still in start-up mode.
Now, and literally against the odds, suppose the company becomes successful. This may signal the hardest time of all for the entrepreneur. Growth often accompanies success, and growth means, among other things, more employees. Not all these new hires will be as committed to the same degree of responsibility for customers. They will not necessarily set out to cheat clients, but they might lack the founder’s enthusiasm for the most honorable treatment of customers. How can an entrepreneur ensure that the initial commitment carries over to the second generation of leadership? He or she cannot simply order it to happen—human nature usually does not respond so easily. So entrepreneurs must do their best to ensure that their version of customer service, one that prioritizes respect for clients, is passed along to new employees. It may be ingrained in the longest-serving employees, but it must be nurtured to the point where it has the same significance for the newest hires. This is where leadership mettle is tested to the severest degree.
CASES FROM THE REAL WORLD
Growing Up with a Start-Up
In the summer of 1970, a college senior named Paul Orfalea opened a store near the University of California, Santa Barbara, campus. He called it “Kinko’s” after his own nickname and, with his partners, he sold college school supplies and around-the-clock copying services for students. After twenty-five years, Kinko’s had grown to 1,200 stores and 23,000 employees, and Orfalea privately and lucratively sold it to FedEx.
Over the many years that Orfalea ran his start-up, his business became amazingly profitable but also imposed enormous stress on him and his founding partners and coworkers. As he put it, “I don’t hide the fact that I have a problem with anger.”8 Since selling the company, Orfalea has spent many years mending relationships with those who worked most closely with him while he was building it.
What contributed to the tensions Orfalea felt while managing this burgeoning enterprise? Long hours, of course, but also the need he felt to sustain his initial success, to make each year more profitable than the last. Entrepreneurs often believe they are only as successful as their last quarter’s profit and are driven to exceed it. Orfalea also felt that he alone was equipped to call others to account and veto what he felt were bad business ideas. Anger became a chief enemy he battled.
“In my mid- to late-forties,” he said, “I struggled increasingly to manage my own emotional nature. Sometimes I felt I’d created a monster. The monster wasn’t Kinko’s, it was me.”9 Orfalea acknowledged the anger and resentment that he often felt toward other longtime staff at the company, which overpowered the respect that he knew he owed them. Consequently, he directed comments and actions at his colleagues that he has spent many subsequent years attempting to redress. All in all, he has labored diligently to repair friendships that he admits were frayed by his behavior alone.
After reflection, Orfalea now offers these recommendations to prospective entrepreneurs: Do not give way to your anger in the midst of the frustrating turns business inevitably takes. Do not take that anger home with you, either. Finally, try to be the person you most genuinely are, both at work and at home. It took Orfalea time to learn these lessons, but they are worthwhile for any would-be entrepreneur to ponder.10
Critical Thinking
• What price would you be willing to pay to pursue an entrepreneurial career? What price would you demand from your partners in the business? How long could you let work monopolize your life?
• In your opinion, was Orfalea right to manage Kinko’s the way he did as it grew? Were the worries, anxieties, and bad moods he experienced inevitable? How would you avoid these? | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/09%3A_Professions_under_the_Microscope/9.01%3A_Introduction.txt |
Learning Objectives
By the end of this section, you will be able to:
• Discuss how social media has altered the advertising landscape
• Explain the influence of advertising on consumers
• Analyze the potential for subliminal advertising
The advertising industry revolves around creating commercial messages urging the purchase of new or improved products or services in a variety of media: print, online, digital, television, radio, and outdoor. Because as consumers we need and want to be informed, this feature of advertising is to the good. Yet some advertising is intended to lead to the purchase of goods and services we do not need. Some ads may make claims containing only the thinnest slice of truth or exaggerate and distort what the goods and services can actually deliver. All these tactics raise serious ethical concerns that we will consider here.
The Rise of Social Media
Relevant to any discussion of the influence and ethics of advertising is the emergence and dominance of social media, which now serve as the format within which many people most often encounter ads. Kelly Jensen, a digital-marketing consultant, observed that we inhabit a “Digital Era” in which “the internet is arguably the single most influential factor of our culture—transforming the way we view communication, relationships, and even ourselves. Social media platforms have evolved to symbolize the status of both individuals and businesses alike. . . Today, using social media to create brand awareness, drive revenue, engage current customers, and attract new ones isn’t optional anymore. Now it is an absolute ‘must.’”11
These are bold claims—as are the claims of some advertising—but Jensen argues convincingly that social media platforms reach many consumers, especially younger ones, who simply cannot be captured by conventional advertising schemes. For those who derive most of the significant information that shapes their lives solely through electronic sources, nothing other than social media–based appeals stands much chance of influencing their purchasing decisions.
This upending of conventional modes of advertising has begun to change the content of ads dramatically. It certainly presents a new stage on which people as young as their teens increasingly rely for help in choosing what to buy. Many marketers have come to appreciate that if they are not spreading the word about their products and services via an electronic source, many millennials will ignore it.12
Undeniably, a digital environment for advertising, selling, and delivering products and services functions as a two-edged sword for business. It provides lightning-quick access to potential customers, but it also opens pathways for sensitive corporate and consumer data to be hacked on an alarming scale. It offers astute companies nearly unlimited capacity to brand themselves positively in the minds of purchasers, but it simultaneously offers a platform for disgruntled stakeholders to assail companies for both legitimate and self-serving reasons.
Paul A. Argenti, who has taught business communication for many years at the Tuck School of Business at Dartmouth University, has studied this dilemma. As he put it, “mobile apps have created a new playground for cyber-thieves.”13 And consumer advocates and purchasers alike “now use technology to rally together and fuel or escalate a crisis—posing additional challenges for the corporation” in the crosshairs of criticism. Finally, “the proliferation of online blogs and social networking sites has greatly increased the visibility and reach of all current events, not excluding large corporate”14 bungling.
Regardless of the delivery platform, however, any threat that the advertising of unnecessary or harmful products may pose to our autonomy as consumers is complicated by the fact that sometimes we willingly choose to buy goods or services we may not necessarily require. Sometimes we even buy things that have been proven to be harmful to us, such as cigarettes and sugary drinks. Yet we may desire these products even if we do not need them. If we have the disposable income to make these discretionary purchases, why should we not do so, and why should advertisers not advise us of their availability?
Does Advertising Drive Us to Unnecessary Purchases?
By definition, advertising aims to persuade consumers to buy goods and services, many of which are nonessential. Although consumers have long been encouraged to heed the warning caveat emptor (let the buyer beware), it is a valid question whether advertisers have any ethical obligation to rein in the oft-exaggerated claims of their marketing pitches. Most consumers emphatically would agree that they do.
The award-winning Harvard University economist John Kenneth Galbraith directly addressed this issue in The Affluent Society, first published in 1958. In what he depicted as the “the dependence effect,” Galbraith bemoaned the power of corporations to harness wide-ranging advertising strategies, marketing efforts, and sales pitches to influence consumer purchasing decisions.15 He asked whether it is possible for a sophisticated advertising campaign to create a demand for a product whose benefits are frivolous at best. If so, is there anything inherently wrong with that? Or are informed consumers themselves responsible for resisting tempting—though misleading—advertising claims and exercising their own best judgment about whether to buy a product that might be successful, not because it deserves to be but simply because of the marketing hype behind it? These questions remain fundamental to the manager’s task of creating ethical advertising campaigns in which truthful content is prioritized over inducing wasteful consumption.
Psychological appeals form the basis of the most successful ads. Going beyond the standard ad pitch about the product’s advantages, psychological appeals try to reach our self-esteem and persuade us that we will feel better about ourselves if we use certain products. If advertising frames the purchase of a popular toy as the act of a loving parent rather than an extravagance, for instance, consumers may buy it not because their child needs it but because it makes them feel good about what generous parents they are. This is how psychological appeals become successful, and when they do work, this often constitutes a victory for the power of psychological persuasion at the expense of ethical truthfulness.
Purchases are also affected by our notion of what constitutes a necessity versus a luxury, and that perception often differs across generations. Older consumers today can probably remember when a cell phone was considered a luxury, for instance, rather than a necessity for every schoolchild. On the other hand, many younger consumers consider the purchase of a landline unnecessary, whereas some older people still use a conventional phone as their main or even preferred means of communication. The cars and suburban homes that were once considered essential purchases for every young family are slowly becoming luxuries, replaced, for many millennials, by travel. Generational differences like these are carefully studied by advertisers who are anxious to make use of psychological appeals in their campaigns.
A consumer craze based on little more than novelty—or, at least, not on necessity or luxury in the conventional sense—is the Pet Rock, a recurring phenomenon that began in 1977. Pet Rocks have been purchased by the millions over the years, despite being nothing more than rocks. During the 2017 holiday shopping season, they retailed at \$19.95.16 Is this a harmless fad, or a rip-off of gullible consumers who are persuaded it can satisfy a real need? In the annals of marketing, the Pet Rock craze denotes one of the most successful campaigns—still unfolding today, though in subdued fashion—in support of so dubious a product.
As long as marketers refrain from breaking the law or engaging in outright lies, are they still acting ethically in undertaking influential advertising campaigns that may drive gullible consumers to purchase products with minimal usefulness? Is this simply the free market in operation? In other words, are manufacturers just supplying a product, promoting it, and then seeing whether customers respond positively to it? Or are savvy marketing campaigns exerting too much influence on consumers ill prepared to resist them? Many people have long asked exactly these questions, and we still have arrived at no clear consensus as to how to answer them. Yet it remains an obligation of each new generation of marketers to reflect on these points and, at the very least, establish their convictions about them.
A second ethical question is how we should expect reasonable people to respond to an avalanche of marketing schemes deliberately intended to separate them from their hard-earned cash. Are consumers obligated to sift through all the messages and ultimately make purchasing decisions in their own best interest? For example, does a perceived “deal” on an unhealthy food option justify the purchase (Figure 9.3)? These questions have no consensus answers, but they underlie any discussion of the point at which sophisticated advertising runs headlong into people’s obligation to take responsibility for the wisdom of their purchases.
No one would argue that children are particularly susceptible to the ads commercial television rains over them regularly. Generally, young children have not developed sufficient judgment to know what advertised products are good for them and which ones have little or no benefit or perhaps can even harm. Research has even shown that very young children have difficulty separating what is real on television from what is not. This is especially so as it pertains to advertising for junk food. Savvy marketers take advantage of the fact that young children (those younger than age seven or eight years) view advertising in the same manner they do information from trustworthy adults—that is, as very credible—and so marketers hone pitches for junk food directly to these children.17
What restrictions could we reasonably impose on those who gear their ads toward children? We could argue that they should take special care that ads targeting children make absolutely no exaggerated claims, because children are less capable of seeing through the usual puffery that most of us ignore. Children are more literal, and once they gain the ability to understand messages directed toward them, especially when voiced by adult authority figures, they typically accept these as truthful statements.
When adults make poor consumer choices, who is responsible? Is it ourselves? Is it our society and culture, which permit the barrage of marketing to influence us in ways we often come to regret? Is it the persuasive power of marketers, which we should rein in through law? Do adults have the right to some assistance from marketers as they attempt to carry out their responsibility to protect children from manipulative ads? We have no easy answers to these questions, though they have taken on special urgency as technology has expanded the range of advertising even to our smartphones.
Is Subliminal Advertising Real?
It may be possible for marketing to be unfairly persuasive in ways that overwhelm the better judgment of consumers. Whether it is the consumers’ responsibility to resist or marketers’ to tone down their appeals, or both, will continue to be debated. Yet the question of where responsibility lies when consumers are steered to make choices certainly has ethical ramifications.
Some psychologists and educational specialists claim that the very old and the very young are particularly ill prepared to exercise good judgment in the face of subliminal advertising, that is, embedded words or images that allegedly reach us only beneath the level of our consciousness. Other experts, however, disagree and insist that subliminal advertising is an urban myth that no current technology could create or sustain.
A U.S. journalist, Vance Packard, published The Hidden Persuaders in 1957, contending that subliminal messaging had already been introduced into some U.S. cinemas to sell more refreshments at the theaters’ snack bars. Alarms sounded at the prospect, but it turned out that any data on which Packard was relying came from James Vicary, a U.S. market researcher who insisted he had engineered the feat in a cinema in New Jersey. No other substantiation was provided, and Vicary’s claim was eventually dismissed as self-promotion, which he seemed to concede in an interview five years later. Although the immediate threat of subliminal advertising receded, some people remain concerned that such persuasion might indeed be possible, especially with the advent of better technologies, like virtual reality, to implement it.18
A 2015 study at the University of South Carolina found that thirsty test subjects placed in the role of shoppers in a simulated grocery store could be subliminally influenced in their choice of beverages if they were primed by images of various beverage brands within fifteen minutes of acknowledging being thirsty. After that window of time passed, however, any impact of subliminal messaging receded.19
So the scientific evidence establishing any real phenomenon of subliminal advertising is inconclusive. Put another way, the evidence to this point does not definitively demonstrate the existence of a current technology making subliminal marketing pitches possible. Given this, it cannot be clearly determined whether such a technology, if it did exist, would be effective. Another question is whether virtual reality and augmented reality might eventually make subliminal advertising viable. Real subliminal persuasion might render children, the elderly, and those with developmental disabilities more vulnerable to falling prey. Could even the most skeptical viewer resist a message so powerfully enhanced that the product can be sampled without leaving home? Would you be in favor of federal government regulation to prevent such ads? What sort of ethical imperatives would you be willing to request of or impose on sophisticated marketers?
Advertising plays a useful role in informing consumers of new or modified products and services in the marketplace, and wise purchasers will pay attention to it but with a discerning eye. Even the exaggerated claims that often accompany ads can serve a purpose as long as we do not unquestioningly accept every pitch as true. | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/09%3A_Professions_under_the_Microscope/9.03%3A_The_Influence_of_Advertising.txt |
Learning Objectives
By the end of this section, you will be able to:
• Discuss whether the underlying business model of the insurance industry is an ethical one
• Identify the reasons why the government offers certain kinds of insurance
• Discuss the ethical issues in insurers’ decisions whether to offer disaster insurance
• Explain the concept of redlining
Although the concept of insurance dates back to antiquity, the insurance industry as a profession came of age in the seventeenth century, when maritime trade in valuable commodities like coffee, tea, cocoa, sugar, and silk became an immense industry, but one fraught with uncertainty. Merchants sought a means to limit their financial losses in the event their cargoes were lost at sea.
In England, merchants and shippers gathered together in associations, or syndicates, to distribute the risk of loss as evenly as possible. For a fee, individual merchants and ships’ owners in these syndicates could buy insurance, essentially the right to be financially compensated by the syndicate’s fund for their loss if their shipments or vessels sank. The first such association of traders and shippers began at Samuel Lloyd’s coffee house, on Tower Street near the River Thames, in 1688. This was the origin of the huge insurance market now known as Lloyd’s of London,20 and from these early forms of group insurance sprang the profession as it exists today.
From the seventeenth century to the present, the profession has faced a fundamental ethical quandary: An insurance company makes money when purchaser fees, called premiums, are numerous and claims, requests for monetary compensation for covered losses, are few. But the reality is that accidents occur, whether they take the form of shipping losses, vehicular collisions, or home or business fires. So insurance carriers set customer premiums at a high enough rate to compensate themselves with a baseline profit when claims for compensation arise. The ethical question then is what constitutes a reasonable profit. The way the industry defines “reasonable” is directly reflected in the premiums it sets, which also take into account actuarial and statistical calculations of the historic frequency of the occurrence of various claims.
How Insurance Works
The irony of insurance coverage of any sort is that we buy it hoping never to use it. Still, business and consumers alike appreciate that a catastrophic loss can be financially devastating and so they seek to protect against it. Insurance coverage does not prevent illness, accidents, or other unforeseen events from occurring, but it does offer a means to recover, at least partially, from the monetary costs associated with them.
Insurance policies constitute a form of contract between insurers and the insured. To reduce their losses in those situations in which they must pay on a claim, insurers do their best to attach high premiums to the coverage and identify exclusions and limits on it. They worry about being forced to pay out on frivolous and exaggerated claims, while policyholders fear that on the rare occasions when they will have to file a claim, their reimbursement will be minuscule and/or their future premiums will rise. From the perspective of the consumer, the guarantee of a fair payout on a claim is the only inducement to pay insurance premiums in the first place.
WHAT WOULD YOU DO?
Valuing Your Inventory versus Valuing Your Employees
Assume you are the owner of a small apparel manufacturer with approximately fifty employees. Your business is located in a blighted area of town where the jobs you provide are important, but the insurance costs of doing business there are significant, too. Recently, fire and theft coverage has escalated in cost, but it is essential to protect your premises and inventory, and local ordinances require that you purchase it. You have customarily provided health coverage for your employees and their families, which many of them would not be able to afford if they had to bear the cost themselves. You would like to continue providing this coverage—though, due to your small employee base, you are not legally obligated to do so—but these costs have risen too. Finally, you would prefer to stay in this location, because you feel an obligation to your workers, most of whom live nearby, and because you feel welcomed by the community itself, which includes some longtime customers. Still, you may be forced to choose between paying for your employee health care costs and moving to a different area of town where fire and theft coverage would not cost as much.
Critical Thinking
• How will you make the decision within an ethical framework?
• What will you, your business, and your employees gain and lose based on what you decide?
• What, if anything, do you and your business owe the community of which you have been a part for so long?
Insurance protections are, in fact, limited. In August 2017, Hurricane Harvey dumped fifty-two inches of rain on Houston, Texas, accompanied by fierce winds. Tens of thousands of homes, stores, factories, and other industrial sites suffered severe damage and flooding. Although normal homeowners’ and business owners’ insurance provides for loss due to hurricane winds, it does not cover loss due to flooding. As The Economist observed in the immediate aftermath of the hurricane, “whereas wind damage is covered under most standard insurance policies in America, flood insurance is a government-run add-on that far from all homeowners buy. As a result, of over \$30 billion in property losses in Texas, only 40 percent may be insured.”21
Not only do few homeowners buy flood insurance; few private insurers offer it. After all, most insurance carriers are for-profit, and companies would make little money insuring everyone against flood damage in flood-prone areas. It would be a losing proposition for any carrier to undertake, because insurance companies enjoy their highest returns when claims are few and payouts small. But the federal government is not a commercial broker and does not intend to make a profit from extending any sort of insurance coverage. For that reason, the National Flood Insurance Act of 1968 established a way to dispense flood coverage through a federal agency. Today that supervising agency is the Federal Emergency Management Authority (FEMA), in partnership with the Department of Homeland Security (Figure 9.4). As of August 2017, just before Harvey struck, some five million households had taken out FEMA-sponsored flood coverage.22
link to learning
Consumers’ criticisms of the insurance industry are not limited to the United States; they pose an international issue for the profession. Read this Sydney Morning Herald article that explores the causes of controversy that haunt insurance carriers in Australia to learn more. Principally, they center on the lengths to which insurers might go to disallow a claim and so dispose of their obligation to pay out on it, at least according to some consumer watchdogs.
The California Earthquake Authority serves a similar function at the state level by managing privately funded insurance against earthquakes in California. The private brokers in the program make no profit from offering this coverage, but they do earn the right to offer (and profit from) other insurance in California.
The Ethical Dilemma of Insuring against Natural Disasters
We do not know with certainty what effect climate change will have on the incidence or severity of natural disasters (i.e., accidents that do not appear to have any direct human cause). We do know, however, that these events can be ruinously expensive, for the carriers that insure against them and for those who suffer them and must put their lives back together afterward.
Business writer Don Jergler said, for example, that “climate change has created a ‘wildfire crisis in California,’ which in turn is ‘causing a fire insurance predicament.’” California insurance commissioner Dave Jones warned in December 2017, after a particularly disastrous fire season in California, that “insurers may start to back off writing insurance in some areas [of the state],” and this would pose a crisis for homeowners who consequently lost insurance protection against losses caused by wildfires.23
In Canada, too, “environmental risks linked to climate change are becoming important issues for insurers who need to consider their response to related risks and climate related losses whether arising from weather related events such as flood and storms or liability risks from third party claims.”24
When insurance carriers must pay claimholders more often on claims arising from natural disasters, they lose money at a rate that could make them less willing to underwrite similar policies in the future. This unwillingness, in turn, would deny coverage against these disasters to an increasing number of individuals and companies. The high cost of disaster claims and subsequent shrinking of policy offerings are losses first experienced by the insurance industry, but they have rapid and dire consequences for policyholders.
Again, we come to the ethical conundrum as to what we might fairly expect from insurance carriers and from clients who seek to indemnify themselves against natural disasters. In regions where certain kinds of disasters are more likely to occur, is it reasonable to dictate that carriers still must provide coverage? If so, should we consider extending public subsidies to the carriers to protect them against catastrophic payouts? Should premiums be assigned on the basis of the incidence patterns and severity of risk associated with particular disasters in certain regions? With these questions, we return to the ethical consideration of what constitutes a reasonable profit for carriers and what premium policy holders ought to be charged for sufficient coverage.
The United States does not have the strong tradition of private/public ownership of industries, such as petroleum extraction or air travel that some other nations do.25 Essentially, private/public ownership is an arrangement in which private (industry) and public (government) monies are combined to more safely bear an industry’s risk and also share in its profit. It is often a successful partnership. When we consider the scale of loss that can result from natural disasters, and the extent of the public’s need for protection from such loss, insurance may be a U.S. industry in which private/public ownership of some policies would be appropriate. The National Flood Insurance Program and the California Earthquake Authority are rare examples of public agencies managing insurance coverage that private insurers have declined to provide because the potential for profit is too low. Whether partnerships like this can and should be expanded, and whether they can be funded from federal and state budgets, are ethical questions for federal and state governments and policyholders alike.
CASES FROM THE REAL WORLD
What Does the Future Hold for the Insurance Industry?
Many insurance carriers enjoy a robust business. As an example, UnitedHealth Group Incorporated, headquartered in Minnesota, had about \$185 million in sales in 2017 and employed approximately 230,000 people. Still, as an industry report from the business research company Hoovers established, insurers of all stripes, health or auto or property or anything else, face two major hurdles. First, they “are increasingly subject to a large number of regulations and reporting requirements by states. Consequently, some insurers have withdrawn from states that impose burdensome requirements.” Second, large-scale “claims have become more common, creating problematic concentrations of risk for individual insurers. . . . And some risks can be large enough to drive insurers out of business or cause them to curtail services offered, increase rates, or leave states where risk is highest.”26 Thus, profits can be high within the industry, but so can payouts in the aftermath of major catastrophes. The report goes on to say that “floods, hurricanes, and tornadoes” produce the riskiest economic circumstances for the industry. Consequently, states in which these weather events are more common—Alabama, Florida, and North Carolina—have seen some carriers cease business operations within them.27
Critical Thinking
• In selecting coverage and setting prices, how does an insurance company choose the ethical balance between making a reasonable profit and risking catastrophic losses of its own?
• Should the law require that carriers offer property insurance in states where harsh natural disasters occur? Or should federal and state monies be used to subsidize insurance companies’ resources in these circumstances? In each case, why or why not?
Redlining: Discrimination in Insurance
A specific ethical challenge within the insurance profession is the tendency to engage in redlining. Redlining is the practice of assigning or denying coverage for certain policies, such as auto, homeowners, or business insurance, on the basis of the geographic neighborhoods where applicants for such coverage live, particularly inner-city neighborhoods. A variation on the practice is to charge considerably higher prices for the same coverage in different neighborhoods. Redlining assumes that the propensity for accidents, burglaries, fires, and other catastrophes is higher in some areas than others, so claims and costs will be higher for the insurance carrier.
At first glance, this practice appears to make economic sense from the perspective of both the insurer and the insured. Looking beneath the surface, however, reveals that redlined neighborhoods are often areas where racial and ethnic minorities live. No insurance carrier ever admits to engaging in discriminatory redlining (the term refers to an older practice by which insurance companies marked certain neighborhoods in red on print copies of coverage maps). Nearly every state in the United States forbids the practice. Yet a comprehensive 2017 study by Consumer Reports and ProPublica, a nonprofit research organization, indicated the phenomenon may remain very much a reality. This study focused on rates for auto insurance and found that for “decades, auto insurers have been observed to charge higher average premiums to drivers living in predominantly minority urban neighborhoods than to drivers with similar safety records living in majority white neighborhoods. Insurers have long defended their pricing by saying that the risk of accidents is greater in those neighborhoods, even for motorists who have never had one.”28
The authors of the report compared auto insurance premiums and claims paid in four states (California, Illinois, Missouri, and Texas) and found similar results whether the carrier was Allstate, Geico, Liberty Mutual, or another. They contended “that many of the disparities in auto insurance prices between minority and white neighborhoods are wider than differences in risk can explain.”29 This is significant because laws do typically permit premium rates to be set according to the incidence of claims filed within certain neighborhoods. Yet laws never allow rates to be based solely or predominantly on the race or ethnicity of the residents in different neighborhoods. This is the essence of prohibited redlining. Professionals in the industry do well to steer clear of this practice or even the appearance of it, and that is the overriding theme of this study.
Drawing back, the ethical challenge for any responsible carrier is to ensure that the race, ethnicity, or creed of any policyholder plays absolutely no role in the premiums assigned him or her. There is no defensible reason to base a carrier’s decision to extend or deny insurance coverage or assign the premium amount for it on these factors. | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/09%3A_Professions_under_the_Microscope/9.04%3A_The_Insurance_Industry.txt |
Learning Objectives
• By the end of this section, you will be able to:
• Identify ethical problems related to the availability and cost of health care in the United States and elsewhere
• Discuss recent developments in insuring or otherwise providing for health care in the United States
Private health care in the United States has historically been of high quality and readily available, but only for those who could afford it. This model for rationing health services is rare in the developed world and stands in dramatic contrast to the provision of health care in other industrialized economies. Those who provide health care and administer the health care system find that balancing the quality of, access to, and cost of medical care is an ethical dilemma in which they must continually engage.30
Multipayer Health Care in the United States
Typically in the United States, medical services have been dispensed through a multipayer health care system, in which the patient and others, such as an employer and a private health insurance company, all contribute to pay for the patient’s care. Germany, France, and Japan also have multipayer systems. In a single-payer health care system such as those in the United Kingdom and Canada, national tax revenues pay the largest portion of citizens’ medical care, and the government is the sole payer compensating those who provide that care. Contributions provided by employers and employees provide the rest. Both single- and multipayer systems help reduce costs for patients, employers, and insurers; both, especially single-payer, are also heavily dependent on taxes apportioned across employers and the country’s population. In a single-payer system, however, because payment for health care is coordinated and dispensed by the government, almost no one lacks access to medical services, including visitors and nonpermanent residents.
Many reasons exist for the predominance of the multipayer system in the United States. Chief among these is the U.S. tradition that doctors’ services and hospital care are privatized and run for profit. The United States has no federal health care apparatus that organizes physicians, clinics, and medical centers under a single government umbrella. Along with the profit motive, the fact that providers are compensated at a higher average rate than their peers abroad ensures that health care is more expensive in the United States than in most other nations.
The United States also has more health care professionals per citizen than most other countries, and more medical centers and clinics (Figure 9.5). One positive result is that the wait for most elective medical procedures is often shorter than in other countries, and travel time to a nearby medical facility is often less. Still, paying for health care remains one of the most controversial topics in the United States, and many question what it is that Americans gain from the current system to balance the cost. As an exhaustive study from The Commonwealth Fund asserted, “the United States spends far more on health care than other high-income countries, with spending levels that rose continuously over the past three decades. . . . Yet the U.S. population has poorer health than other countries.”31
Besides its inefficiencies, the state of U.S. health care raises challenging ethical issues for professionals in the field and for patients as well. What happens if many poorer people cannot afford health care? Should doctors treat them anyway? Who is qualified to receive subsidized (insured) health care? In the absence of universal health care, which is generally ensured elsewhere by a single-payer system that entitles everyone to receive care at very low cost, can the United States truly boast of being the richest nation on Earth? Put another way, when the least materially advantaged in a country do not have access to quality health care, what is the worth such a nation patently is assigning to those human beings residing within it?
Supporters of the status quo for health care in the United States may point to state-of-the-art facilities as evidence of its success. Yet other nations, such as Australia, the United Kingdom, and the Netherlands, have equal levels of medical technologies available for patients and are given much more favorable marks for universal health insurance and accessibility by The Commonwealth Fund.
The High Cost of Prescription Drugs
Discussions of health care accessibility have become politically charged, so for now it is enough to observe that not only is medical care enormously expensive in the United States but so are prescription drugs. According to William B. Schultz, an attorney writing in the Washington Post in 2017, “in the past 35 years, the only significant victory in the battle to control drug prices has been the enactment of legislation that established the generic drug program at the FDA [Federal Drug Administration].” Otherwise, he stated, “prescription drug prices account for 17 percent of the nation’s health-care costs, up from 7 percent in the 1990s,” and “prescription drug spending accounts for nearly 20 percent of total program spending for Medicare, the largest of the governmental health-care programs.”32 (Schultz is not entirely impartial; he is a partner in a law firm that represents generic drug providers, among other clients.)
Link to learning
The New York Times asked its readers to relay their experiences as purchasers of prescribed medicines that they thought carried much too high a price tag. This article on some of the reader responses to drug prices was reported by two journalists at the paper, Katie Thomas and Charles Ornstein.
The only way to recoup the enormous cost of developing new drugs, says the pharmaceutical industry, is to pass it along to consumers. Critics, on the other hand, assert that the much of the expense incurred within the industry results from the high cost of marketing new drugs. Wherever the truth lies in this debate, it remains that exorbitant prices for much-needed medicines dramatically reduce their social value when only a few individuals can actually afford to obtain them. What does it say of our priorities if we have the technology to create life-saving medicines but allow astronomic prices effectively to deny them to many patients who require them?
Paying for Health Care and Wellness
Within the multipayer system, many U.S. workers have traditionally looked to their employers or their unions to subsidize the cost of care and thereby make it available for them and their families. Many reasons explain why this is so. In contrast to the European and Canadian perspective, for example, in which both the state and employers are presumed to have an interest in and responsibility for underwriting the cost of health care, the traditional U.S. approach is that workers and their employers should be responsible for securing this coverage. This belief reflects an unease on the part of some about assigning services to the government, because this implies the need for a larger governing entity as well as additional taxes to sustain it. The sentiment also reflects a conviction on the part of some that self-reliance is always to be preferred when securing the necessities of life.
John E. Murray, a professor of economics at the University of Toledo, offered a related explanation. He cited the existence of industrial sickness funds in the United States, which arose in the late nineteenth and early twentieth centuries. These were monies “organized by workers through their employer or union [that] provided the rudiments of health insurance, principally consisting of paid sick leave, to a large minority of the industrial workforce of the late nineteenth and early twentieth centuries.”33 Murray stated that these funds declined in popularity not because they were ineptly administered or rendered bankrupt by World War I or the Great Depression but rather because they gave way to even more effective instruments in the form of group insurance policies offered by employers or labor unions.
So the U.S. worker’s experience differed from that of European labor in that much significant health care coverage was provided under the auspices of unions and employers rather than the state. Murray noted another source of relief for workers who experienced illness or injury that prevented them from working for any period of time, and that was charity.34 Specific versions of charity were offered by religious organizations, including Christian churches and Jewish synagogues. Often, these religious bodies banded together to provide monetary benefits for sick or injured members of their own faith who might otherwise have been denied health coverage due to prejudice.35 The U.S. social experience featured more ethnic and cultural diversity, especially in the nineteenth and early twentieth centuries, than was present in many European nations, and a downside is the racial, ethnic, and religious prejudice it inspired.
A final distinction Murray pointed to is the past opposition of the American Medical Association to any sort of state-sponsored insurance. Early supporters of industrial sickness funds, including some physicians, anticipated that most doctors would support these funds as pathways ultimately directed to state-provided coverage. Instead, in 1920, “the American Medical Association voted officially to state its opposition to government health insurance. A sociologist concluded that from this time to the 1960s, physicians were the loudest opponents of government insurance.”36 By default, then, many U.S. workers came to rely more on their employers or unions than on any other source for coverage. However, this explanation does not answer the larger ethical question of who should provide health insurance to residents and citizens, a question that continues to roil politics and society in the nation even today.
More recently, large corporations have moved from providing one-size-fits-all insurance plans to compiling a menu of offerings to accommodate the different needs of their employees. Workers with dependent children may opt for maximum health care coverage for their children. Employees without dependents or a partner may elect a plan without this coverage and thereby pay lower premiums (the initial cost for coverage). Yet others might minimize their health-insurance coverage and convert some of the employer costs that are freed up into added pension or retirement plan value. Employers and workers have become creative in tailoring benefit plans that best suit the needs of employees (Figure 9.6). Some standard features of such plans are the copayment, a set fee per service paid by the patient and typically negotiated between the insurance carrier and the employer; the annual deductible, a preset minimum cost for health care for which the patient is responsible each year before the carrier will assume subsequent costs; and percent totals for certain medical or dental procedures that patients must pay before the carrier picks up the remainder.
Despite the intricacies of this customization, employers have found the group coverage policies they offer to be expensive for them too, more so with each passing year. Full health care coverage is becoming rarer as a standard employment benefit, and it is often available only to those who work full time. California, for example, stipulates that most workers need not be provided with employer health care coverage unless they work at least twenty hours a week.
Rising costs for both employers and employees have combined to leave fewer employees with health care benefits at any given time. Employees with limited or no coverage for themselves and their dependents often cope by cutting back on the medical attention they seek, even when doing so places their health at risk. Whenever workers must skip medical services due to cost considerations, this places both them and their employers in an ethical quandary, because both typically want workers to be in good health. Furthermore, when employees must deny their dependents appropriate health care, this dilemma is all the more intensified.
To try to reduce the costs to themselves of employee health care insurance coverage, some companies have instituted wellness programs to try to ensure that their workforces are as healthy as possible. Some popular wellness program offerings are measures to help smokers quit, workout rooms on work premises or subsidized gym memberships, and revamped vending and cafeteria offerings that provide a range of healthier choices. Some companies even offer employees bonuses or other rewards for quitting smoking or achieving specific fitness goals such as weight loss or miles walked per week. Such employer efforts appear benign at first glance, because these measures truly can produce better health on the part of workers. Still, ethical questions arise as to who the true beneficiaries of such policies are. Is it the employees themselves or the companies for which they work? Furthermore, if such measures were to become compulsory rather than optional, would it still reflect managerial benevolence toward employees? We discuss this in the following paragraphs.
Wellness programs were inspired by safety programs first created by U.S. manufacturers in the 1960s. These companies included Chrysler, DuPont, and Steelcase. Safety programs were intended to reduce workplace accidents resulting in injuries and deaths. Over the years, such programs slowly but steadily grew in scope to encompass the general health of employees on the job. As these policies have expanded, they also have fostered some skepticism and resistance: “Wellness programs have attracted their share of criticism. Some critics argue workplace programs cross the line into employees’ personal lives.”37 Ann Mirabito, a marketing professor at the Hankamer School of Business at Baylor University agrees there is potential for abuse: “It comes back to the corporate leader. . . . The best companies respect employees’ dignity and offer programs that help employees achieve their personal goals.”38
Employees who exercise, eat healthily, maintain their ideal weight, abstain from smoking, and limit their alcoholic consumption have a much better chance of remaining well than do their peers who undertake none of these activities. The participating employees benefit, of course, and so do their employers, because the health insurance they provide grows cheaper as their workers draw on it less. As Michael Hiltzik, a consumer affairs columnist for the Los Angeles Times, noted, “Smoking-cessation, weight-loss and disease-screening programs give workers the impression that their employers really care about their health. Ostensibly they save money too, since a healthy workforce is cheaper to cover and less prone to absenteeism.”39
Certainly, employers are also serving their own interests by trying to reduce the cost of insuring their workers. But are there any actual disadvantages for employees of such wellness programs that employers might unethically exploit? Hiltzik suggested one: “The dark downside is that ‘voluntary’ wellness programs also give employers a window into their workers’ health profiles that is otherwise an illegal invasion of their privacy.”41 Thus the health histories of workers become more transparent to their bosses, and, Hiltzik and others worry, this previously confidential information could allow managers to act with bias (in employee evaluation and promotion decisions, for instance) under cover of concern about employees’ health.
The potential for intrusion into employee privacy through wellness programs is alarming; further, the chance for personal health data to become public as a consequence of enrolling in such programs is concerning. Additionally, what about wellness rules that extend to workers’ behavior off the job? Is it ethical for a company to assert the right to restrict the actions of its employees when they are not on the clock? Some, such as researchers Richard J. Herzog, Katie Counts McClain, and Kymberleigh R. Rigard, argue that workers surrender a degree of privacy simply by going onto payroll: “When employees enter the workplace, they forfeit external privacy. For example, BMI [body mass index] can be visually calculated, smokers can be observed, and food intake monitored.” They acknowledge, however, that “protecting privacy and enhancing productivity can provide a delicate balance.”40
link to learning
As noted in previous chapters, we can find out a great deal about the ethical intentions of a company by studying its mission statement, although even the noblest statement is irrelevant if the firm fails to live up to it. Here is Anthem, Inc.’s very simple and direct mission statement as an example from a health care insurer. What impression does this statement leave with you? Would you add or delete anything to it? Why or why not?
The Affordable Care Act
Health care reform on a major scale emerged in the United States with the passage of the Patient Protection and Affordable Care Act, more commonly known as the Affordable Care Act (ACA), in March 2010, during the Obama Administration. The ACA (so-called Obamacare) represents a controversial plan that strikes its opponents as socialist. For its supporters, however, it is the first effective and comprehensive plan to extend affordable health care to the widest segment of the U.S. population. Furthermore, like most new federal policies, it has undergone tweaks and revision each year since becoming law. The ACA is funded by a combination of payments by enrollees and supplemental federal monies earmarked for this task.
The ACA mandates a certain level of preventive care, a choice of physicians and health care facilities, coverage at no extra cost for individuals with preexisting health conditions, protection against the cancellation of coverage solely on the basis of becoming ill, and mental health and substance abuse treatment, all of which must be met by carriers that participate in the plan. The ACA also permits its holders to select from a number of marketplace plans as opposed to the limited number of plans typically offered by any given employer.42 All in all, it is a far-reaching and complex plan whose full implications for employers and their employees have yet to be appreciated. Preliminary results seem to indicate that employer-provided coverage on a comprehensive scale remains a cheaper alternative for those workers eligible to receive it.43 Given the general efficiency of group insurance policies provided by U.S. employers, an ethical issue for all managers is whether these policies offer the best care for the greatest number of employees and so should be the responsibility of management to offer whenever it is possible to do so. Current law requires all companies employing fifty or more workers to make insurance available to that part of their workforce that qualifies for such coverage (e.g., by virtue of hours worked). Is it right, however, to leave the employees of smaller firms to their own devices in securing health care? Even if the law does not require it, we hold that an ethical obligation resides with small businesses to do everything in their power to provide this coverage for their employees.
Evidence of the intense debate the act has engendered is the Trump administration’s attempts, beginning in January 2017, to repeal the ACA entirely, or at least to dilute significantly many of its provisions. Nearly immediately upon his inauguration, President Trump signed Executive Order 13765 in anticipation of ending the ACA. Also that same month, the American Health Care Act was introduced in the House of Representatives, again with an eye to eliminating or seriously weakening the existing act. Much political debate within both the House and Senate ensued in 2017, with proponents of the ACA seeking to ensure its survival and opponents attempting (but, as of this writing, failing) to repeal it.
The ACA represents the first far-reaching health care coverage to take effect since 1965, after many stalled or otherwise frustrated attempts. Since the passage that year of the Medicare and Medicaid Act, which provided health coverage to retired, elderly, and indigent citizens, many presidential administrations, Democrat and Republican alike, have worked to enlarge health care coverage for different segments of the national population. In addition to expanding eligibility for benefits, the Medicare and Medicaid Act had direct implications for business proprietors and their employees. For one, the act set up new automatic earnings deductions and tax schedules for workers and employers, and employers were made responsible for administering these plans, which help fund the programs’ benefits.
The future of the ACA appears to depend on whether a Democrat or Republican sits in the White House and which party controls the Senate and the House in the U.S. Congress. Although legislation does hinge on the political sentiments of the president and the majority party in Congress, what is ethical does not lend itself to a majority vote. So regardless of whether the ACA survives, is revised, or is replaced entirely by new health care legislation, the provision of health care will likely continue to pose ethical implications for U.S. business and the workers who are employed by it.
The ethical debate over universal health care coverage is larger even than business and its employees, of course, but it still carries immense consequences for management and labor irrespective of how the ACA or other legislation fares in the halls of government and the courts. An ethical dilemma for employers is the extent to which they should make health coverage available to their workers at affordable rates, particularly if federal and state government plans provide little or no coverage for residents and the costs of employer-provided coverage continues to climb.
State-Level Experiments with Single-Payer Health Care Plans
Against the backdrop of federal attempts to institute national health care over the past several decades, some individual states in the United States have used their own resources to advance this issue by proposing mandated health care coverage for their citizens. For example, in April 2006, Massachusetts passed An Act Providing Access to Affordable, Quality, Accountable Heath Care, the first significant effort at the state level to ensure near-universal health care coverage.
The Massachusetts act created a state agency, the Commonwealth Health Insurance Connector Authority, to administer the extension of health care coverage to Massachusetts residents. In many ways, it served as the most significant precursor of and guide for the federal ACA, which would follow approximately four years later. By many accounts, the Massachusetts legislation has achieved its purposes with few negative consequences. As Brian C. Mooney, reporting in the Boston Globe, put it about five years after the act’s passage: “A detailed Globe examination [of the implementation of the act] makes it clear that while there have been some stumbles—and some elements of the effort merit a grade of ‘incomplete’—the overhaul, after five years, worked as well as or better than expected.”44
The proposed Healthy California Act (SB 562) is another example. SB 562 passed in the California State Senate in June 2017. However, the Speaker of the Assembly, the lower house of the legislature, blocked a hearing of the bill at that time, and a hearing is necessary for the bill to advance to ratification. A new effort was initiated in February 2018 to permit the bill finally to be considered by the lower house. (Two differences between the California bill and the Massachusetts Act include the number of state residents who would be affected. Massachusetts has a population of about seven million compared to California’s nearly forty million. A second distinction is that SB 562 is constitutes a single-payer plan, whereas the Massachusetts Act does not.)
Single-payer health care plans essentially concentrate both the administration of and payment for health care within one entity, such as a state agency. California’s effort is a very simple plan on its face but complex in its implementation. Here is how Michael Hiltzik summarized the intent of California Senate Bill 562: “The program would take over responsibility for almost all medical spending in the state, including federal programs such as Medicare and Medicaid, employer-sponsored health plans, and Affordable Care Act plans. It would relieve employers, their workers and buyers in the individual market of premiums, deductibles and copays, paying the costs out of a state fund.”45 The bill would create a large, special program apparatus tentatively entitled Healthy California. It is contentious on many fronts, particularly in that it would create the largest single-payer health insurance plan sponsored by a U.S. state and the scope of the plan would necessitate a huge bureaucracy to administer it as well an infusion of state monies to sustain it. Furthermore, it would extend health care coverage to all residents of the state, including undocumented immigrants.
A specific hurdle to passage of Healthy California is that it would cost anywhere from \$370 billion to \$400 billion and would require federal waivers so California could assume the administration of Medicare and Medicaid in the state as well as the federal funds currently allotted to it. All these conditions would be enormously difficult and time consuming to meet, even if the federal government were sympathetic to California’s attempts to do so. In 2018, that was decidedly not the case.
Is free or inexpensive access to health care a basic human right? If so, which elements within society bear the principal responsibility for providing it: government, business, workers, all these, or other agencies or individuals? This is a foundational ethical question that would invoke different responses on the part of nearly everyone you may ask.
ETHICS ACROSS TIME AND CULTURES
Free Universal Health Care
Except for the United States, the largest advanced economies in the world all provide a heavily subsidized universal health care system, that is, a publicly funded system that provides primary health services to all, usually at a nominal fee only and with no exclusions based on income or wealth. Although these systems are not perfect, their continued existence seems assured, regardless of the cultural or political framework of the various countries. A logical question is why the United States would be an outlier on this issue, and whether that might change in the future.
Some answers, as noted in the text, lie in the United States’ historical reliance on a mostly private system, with approximately 83 percent of health care expenses provided by the private sector through insurers and employers (in contrast, this percentage in the United Kingdom is 17). A solution that has gained traction in recent years is conversion to a single-payer system. How might this work? One article estimates that the cost of instituting a national, single-payer health care insurance program in the United States would be \$32 trillion over ten years. If this estimate is accurate, would it be an exorbitant price tag for such a program, or would it be money well spent in terms of making good health care available to all citizens?46
Critical Thinking
• Do you find it appropriate that health care costs be provided by a mix of private versus public sources?
• What advantages might single-payer health care offer over employer-provided coverage, care provided under the ACA, or privately purchased health insurance?
As a nation, the United States has usually preferred a system predicated on private health care providers and insurers to pay for it. This arrangement has worked best in instituting high-quality care with minimal delays even for elective medical procedures. It has systematically failed, however, in establishing any sort of universal dispensation that is affordable for many citizens.
In the early twenty-first century, the United States is moving ever so slowly and with plenty of hiccups toward some degree of national or state management of health care. Precisely where these efforts will take us may not be clear for the next several years. The political, economic, and ethical dimensions of public management of our health care drive considerable controversy and very little agreement. | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/09%3A_Professions_under_the_Microscope/9.05%3A_Ethical_Issues_in_the_Provision_of_Health_Care.txt |
Section Summaries:
9.1 Entrepreneurship and Start-Up Culture
The atmosphere surrounding entrepreneurs and their start-ups can provide a dizzying rush. The opportunities to create a company, be your own boss, make a dramatic impact on business, establish an entrepreneurial culture that will be adopted by others, and possibly become rich in the process certainly all appeal to our human nature. Still, the entrepreneurial lifestyle is challenging, and the success rate for start-ups is exceptionally low. Interpersonal conflicts are prevalent in start-up environments, and entrepreneurs who seek to stay true to their vision and ethical values face a difficult road. At many points, start-up founders have to choose how they most wish to be remembered: for the sake of their business success alone or also for the ethical fashion in which they attained that success and the humane culture they have embedded in their new firm. Sometimes these are mutually exclusive goals, but the most ethical entrepreneurs do their best to ensure that both objectives mesh for themselves and their firms. This lies at the heart of any definition of ethical leadership.
9.2 The Influence of Advertising
The Internet and social media present new canvasses for marketing that possess great power and for which rules and ethical norms are being developed. Psychological appeals and subliminal messaging present their own ethical issues. Discerning consumers currently must rely on their own sensibility to ferret out factual claims for advertised products and bear the burden of shielding those under their charge from the worst manipulative effects of marketing.
9.3 The Insurance Industry
Business owners and individuals are willing to pay insurance premiums in the hope that they will never have to be file a claim for reimbursement on their policy. Because the insurance industry profits only when claims are few and small, there may be a bigger role for government to play in managing disaster insurance through a private/public partnership, such as FEMA currently does to provide flood insurance and the California Earthquake Authority does where potentially disastrous earthquakes may occur. Ethical issues such whether to expand the use of public tax revenues to subsidize these partnerships need to be resolved.
9.4 Ethical Issues in the Provision of Health Care
The United States, unlike countries in Europe, has little tradition of merging the efforts of the state or federal government with that of private employers in the provision of health care. Although the quality of U.S. health care has rarely been challenged, its limited accessibility has posed ethical quandaries for business because many employees necessarily look to their employers for this benefit. The 2010 Affordable Care Act is an ambitious effort to meet the need for health care for all. Individual states have considered, and sometimes enacted, programs of their own to supply universal health care.
Key Terms
advertising
commercial messages urging the purchase of new or improved products or services that reach us in every medium: print, online, digital, television, radio, and outdoor
Affordable Care Act (ACA)
the Patient Protection and Affordable Care Act of 2010, often known as the Affordable Care Act or simply “Obamacare,” a comprehensive federal health care management system
claim
a request to an insurance carrier for monetary compensation for a loss sustained by a customer
copayment
a partial charge for covered care negotiated by the provider and the employer and paid by the employee
deductible
the annual portion of health care costs the patient must assume before full insurance coverage applies
entrepreneur
a business leader willing to take on the risk of starting a new company and offering a product or service in the hope of a profit
entrepreneurial culture
the combination of personality and management style with which entrepreneurs shape the initial business practices and ethical environment of their firm
multipayer health care system
a means of providing health care in which the patient and others such as an employer and a private health insurance company all pay for the patient’s care
premiums
the fees customers pay for different forms of coverage
psychological appeal
advertising intended to bolster consumers’ self-esteem if certain products or services are purchased
redlining
a discriminatory (and usually illegal) insurance practice of denying certain coverages in specific neighborhoods or selling them there at a higher price
single-payer health care system
a means of providing health care in which state or national tax revenues would pay for citizens’ medical care, with the government being the sole payer
subliminal advertising
appeals including words and images that reach us at a level below our consciousness
universal health care system
a means of providing health care to all, funded through taxes and overseen by the central or federal government
wellness programs
employer initiatives that stress healthy eating, exercise, weight management, smoking cessation, and other efforts, to sustain employees’ health and reduce health care costs | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/09%3A_Professions_under_the_Microscope/9.06%3A_Summary.txt |
Beginning in the eighteenth century, in much of the Western world, the Industrial Revolution transformed the nature of work as industry displaced agriculture as the main driver of the economy and machines took over manual labor. Continuing technological changes have further altered the way people work and even the time and place where they do so. Growing numbers of people now spend some of their time working at home. Are they more productive without the distractions of the office or less productive without constant monitoring by managers? Some major companies like Apple, Amazon, Facebook, and Microsoft have constructed elaborate workplace campuses, offering unprecedented levels of amenities and even employee housing. Do these campuses facilitate the balancing of work and life, or do they blur the distinction and tie workers to their jobs instead?
Job sharing and flexible work schedules have emerged as alternatives to traditional patterns of work. These practices permit some workers to more easily fulfill work and life responsibilities. But does job sharing reflect employers’ efforts to respond to workers’ preferences or is it a move to reduce costs?
How will you prepare employees for the impact of robots at work (Figure 10.1) or manage the outsourcing of tasks to contractors in the gig economy? These challenges to traditional employment settings carry ethical implications for all stakeholders, including employers, employees, suppliers, customers, and clients.
10.02: More Telecommuting or Less
Learning Objectives
By the end of this section, you will be able to:
• Identify the benefits of permitting employees to work from home
• Explain the drawbacks of telecommuting for the business and for employees
• Discuss the ethical dilemmas related to telecommuting and some of the solutions
What if your business wanted to expand its local operations from six employees to ten but did not have the office space to add more workers? Today’s businesses have a toolkit of technical solutions to set up working relationships with employees far and wide through voice, computer, video connections, and offsite work-sharing spaces. Coworkers can share files on a remote network server or on the cloud, and managers can use nontraditional methods to monitor activity and performance. Companies like General Assembly, WeWork, and Workbar are leasing access to communal spaces equipped for the business needs of remote workers. Telecommuting is therefore easier to implement than ever. But what exactly are the benefits and drawbacks of telecommuting, and what ethical issues does it raise?
Telecommuting and Its Advantages
The term telecommuting emerged in the 1970s to describe the practice of working at a specific location, whether the employee’s home or an alternate office, to reduce commuting time to a centrally located office space or store. “Telework” was greatly facilitated by new telecommunications technology, including the Internet, e-mail, and mobile phones. Today, telecommuting means any mode of working at a remote location (home or other space) by virtue of an electronic connection and/or telephone and encompasses a variety of employment types, from gig assignments to part-time contract work to traditional full-time employment.
The most recent Census data reveal that almost four million U.S. employees skip the commute for at least part of each week, and according to a 2012 poll, worldwide, one in five workers telecommutes frequently, with approximately 10 percent working from home every day.1 Figure 10.2 depicts the growth in telecommuting in the United States, China, India, France, Germany, and the United Kingdom. Clearly, employers are embracing telecommuting as a tool for flexibility, on a scale from occasional use to full-time implementation.2
Employees can connect to networked company computers from home and use work-enhancing tools on their laptops, tablets, and smartphones to make real-time connections by voice, text, or video with inexpensive or free applications (or “apps”) like FaceTime and Skype. Other software solutions, like GoToMeeting or WebEx, make setting up and even recording a synchronous meeting with sound and video possible for even the smallest companies at fairly low cost. The communication and productivity tools that facilitate telecommuting can only grow in number and sophistication. Virtual reality tools like Microsoft’s Mixed Reality allow a worker in one location to communicate with the holograph of another person in real time. For example, this technology could enable a job interview with a remote candidate. Of course, the use of technology brings with it the need to ensure information security and protection against hacking, including guaranteeing the authenticity of the persons engaging via this technology.
Employers allow employees to telecommute for a variety of reasons. First, it is a powerful recruiting tool for people who want to balance their work and personal lives. It allows employees to work a more flexible schedule to care for children or older relatives while maintaining a career and earning income.3 Individuals with ability challenges also prefer the flexibility that telecommuting affords them.4
Telecommuting also reduces the hours that employees spend traveling to and from the job and can help keep cars off the road. Fewer workers commuting equals less crowding on public transportation.5 Fewer cars mean less air pollution as well. The average U.S. employee (who commutes 30 miles and 60 minutes per day) will save more than \$1000 on gas per year by telecommuting (along with associated costs of parking and vehicle upkeep and insurance).6 Remote workers can continue to do their jobs despite weather conditions that impede travel. They are not exposed to sick coworkers’ germs and may take fewer sick days (which sometimes translates to fewer sick days company-wide). Remote employees are also seldom late for work or early to leave when their workday starts at home.
More broadly, there is a good deal of evidence suggesting that telecommuting has beneficial effects on worker productivity. For example, a call-center study reported in the Harvard Business Review found that telecommuting employees made 13.5 percent more calls, resigned their positions at only half the usual rate, and had much higher job satisfaction compared with employees who did not telecommute.7 The Colorado Department of Transportation, in a study of telecommuting productivity for a branch that issued permits, found 48 percent faster turnaround times for issuing permits and 5 percent more calls for telecommuters.8 Furthermore, studies of JD Edwards teleworkers found them to be 20 to 25 percent more productive than their office colleagues; American Express employees who worked from home were 43 percent more productive than workers in the office.9 With none of the distractions of a traditional office setting, like water-cooler gossip and long lunches, and with the happier attitude, workers tend to enjoy when they have control over their work lives. Telecommuting facilitates increased efficiency and productivity and also typically results in higher retention of workers, thereby reducing recruiting and training costs for firms.
Studies have shown that a person who commutes for an hour a day experiences added stress, anxiety, social isolation, and possibly depression.10 Perhaps that is why companies that implement telecommuting experience less absenteeism overall.11 It may also be easier to collaborate when not sharing a limited amount of space (such as in a cubicle forest), and people may be more willing to share resources with one another when the total number of workers present at the facility is reduced. Another point is that there may be less chatting and gossip among remote workers who are not in daily contact with each other or their colleagues.
Employers may be attracted to telecommuting for other reasons. Having remote employees can reduce office-space costs.12 In fact, a company can consider expanding even when there is no available real estate or capital to enlarge or improve the physical facilities. Companies that hire remote employees can also widen their pool of potential applicants.13 They can choose recruits with better job skills than the local population could provide and expand their sales and marketing territory by hiring employees based in a new area.
Finally, there are many external environmental benefits of telecommuting. We have seen that a business that reduces total office space also reduces its impact on the environment.14 Remote workers would increase their individual consumption of utilities while working at home, but chances are that their home’s energy consumption partially continues during the time spent at a traditional job as well (Figure 10.3).
The Drawbacks of Telecommuting
In 2013, Yahoo’s then–chief executive officer (CEO), Marissa Mayer, ended the company’s work-at-home policy, contending that the change would boost communication and collaboration by bringing people back to the office to work with their colleagues face to face.15 IBM, Aetna, and Bank of America followed her lead, citing a greater need for collaborative communication to compete with smaller firms.16 A backlash in the media followed this announcement, because working at home is popular among Yahoo employees. Yahoo has since shown greater flexibility in allowing some employees to once again work at home.17 But recent research does reveal that employees collaborate more creatively when they meet to discuss projects face to face. This finding has important implications for firms dependent on research and development for their future growth. In fact, Steve Jobs designed the Pixar facility to increase the likelihood of conversations that would promote idea generation.18
Corporate culture is not easy to convey over distance. The remote worker might have developed certain working habits at a different company with a different corporate culture (sometimes in another country). It can be challenging to help employees adapt to the culture of a new company when they work remotely.19
It is also more difficult for employers to monitor some kinds of work-related progress when an employee is working remotely. The likelihood of miscommunication increases when everything must be transmitted electronically or virtually.20 A manager cannot “manage by walking around” when the worker is remote. There are no incidental opportunities to witness a worker interacting with a client or customer.21 Workers may also be more hesitant to ask for direction on a project. Some managers worry that employees will slack off if there is no one there to watch them.22
The remote worker may have qualms about privacy when his or her personal life inevitably intersects with the workday (as when a family member walks into the room or the dog barks during a conference call).23 Children may be confused when it seems like their parent is home but is not available for meals or play or homework help. It may be difficult for remote workers to maintain a work-life balance when their home becomes their office (especially if their hours are flexible). Workers may have to set aside living space for a home office and spend money to buy computing equipment, a desk, and other supplies.
Furthermore, it is difficult for an on-site technology team to provide technical assistance or secure data at the level the company may require when people are working at home. Moreover, when the definition of the workplace begins to blur, who is responsible for injuries that occur on the job at home? The employer is unable to exercise the same control over safety measures that holds in a traditional workplace.24
There may also be productivity concerns. Some remote workers will rise to the challenge of motivating themselves to work diligently. In fact, studies have shown that some remote workers are more productive than their traditional counterparts.25 But it is not easy to sort potential employees into workers and procrastinators without some period of trial and error, which may be costly.
Not all fields are equally suited to telecommuting. Some jobs require consistent in-person contact with clients or customers, such as counseling, physical therapy, and medicine.26 Some industries need the highest computer security, such as banking and finance. Other work settings, such as law enforcement, have increased needs for building security that would make working remotely an unsafe alternative for employees.27
The biggest drawback of telecommuting for the individual employee is the bias that studies reveal in employer attitudes. Most managers, after all, attained their status in a traditional job. When some employees telecommute and others do not, those who are in the physical presence of the employer every day can more easily make an impression (good or bad) simply by interacting with their manager. There is also some indication that employees who opt for a nontraditional work arrangement may be penalized if they are perceived as lazy or less dedicated than those who maintain traditional work hours. Employers might have a stronger recollection of the work produced by the employee they see regularly than they do of the work a remote employee is submitting online. Therefore, promotions and important projects may go to employees who are more visible. The remote employee might eventually be left without equal footing in the push for increased pay and status.
The Ethical Challenges of Telecommuting
Ethical employers must juggle the potential ethical challenges of managing remote employees, including developing trust in remote workers, encouraging trust among project team members when some are working remotely, keeping equity in mind when reviewing the performance of remote and in-office staff, and deciding which employees get to work remotely. Supervisors also must guard against abuse of the remote-work opportunity, maintain the security of the remote employee’s work-related data, foster a level of collaboration that is vital to product development, and protect the remote worker’s safety.28 How can managers meet these challenges?
Although it is easy to consider allowing telecommuting for those who simply ask, managers should instead categorize jobs (not people) by their suitability for remote work. Best Buy recently announced it would modify its work-from-home policy for employees in its corporate office, changing it from a perquisite (or “perk”) of employment to one granted by management on a case-by-case basis and mindful of the circumstances of individual workers.29
Managers should also carefully set up a framework of policies to govern at-home work and ensure fairness. For example, there could be a standard for how much time each person should spend in the office. The Massachusetts Institute of Technology created a remote pilot project in its Executive Education Program.30 Employees were encouraged to work remotely two or three days each week and to be present in the office each Wednesday. After six months of the pilot program, 100 percent of the employees recommended its continuation.
link to learning
Watch this video tracing some of the history of workplaces and speculating about innovations in the future, many of which relate to telecommuting to lean more. Keep a list of the telecommuting-specific innovations and identify any ethical concerns related to them.
Managers should set clear expectations for remote workers, such as maintaining professionalism while working and accomplishing a certain volume of work or number of tasks by a certain time. Those who meet these goals should be rewarded. In the interests of fairness and equity, neither expectations nor rewards should differ from those established for in-house workers.
The ethical employer communicates trust in his or her employees when implementing telecommuting. That trust is based on respect for the employee’s motivation and the recognition that the employee has needs that are important in establishing work-life balance.31 Perhaps the employer’s vote of confidence in the employee’s ability to work well remotely is the reason that productivity tends to increase in successful telecommuting programs. 32 The Figure 10.4 caption lists some of the best practices of successful telecommuting programs.
It would be unethical to place workers without assistance in a new situation in which they can easily fail. Telecommuting workers must be trained in time-management skills so they can maintain their productivity in an environment that may have more or different distractions than a traditional workplace and may make different demands on their time. Training should also strengthen communication skills, such as responding to messages promptly, that help ensure success in a remote setting. To help guard against the risk that telecommuting employees will be unfairly considered “out of sight, out of mind,” the ethical company will adopt written expectations about timely communication in both directions. For instance, it should ensure that managers’ lines of communication are as open to their remote employees as they are to those who can drop by their desk or office to chat.
Finally, many firms with successful telecommuting programs create a social network among employees. They sponsor online social occasions to help employees bond even though they are not in the same place. Workers can then find a way to have some virtual fun, despite the distance that might separate them.33 | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/10%3A_Changing_Work_Environments_and_Future_Trends/10.01%3A_Introduction.txt |
Learning Objectives
By the end of this section, you will be able to:
• Compare the workplaces of yesterday, today, and the future
• Describe the benefits and potential drawbacks of workplace campuses
• Identify ethical challenges in the development of workplace campuses
The physical workplace is changing. Most companies still inhabit traditional office spaces in which managers and employees each have an allotted space, whether an office, a cubicle, or just a desk. However, a growing number are redesigning their spaces with fewer separate offices, substituting flexible or shareable work stations built around communal space.34 The idea is that such “open plan” environments allow for more collaboration and brainstorming because employees are no longer walled off from one another. Shared, multipurpose spaces open to all allow people to gather informally throughout the day. In effect, then, these changes are aimed to augment productivity.
In another trend, companies like Apple, Microsoft, Facebook, Amazon, and Alphabet (which owns Google) are developing expansive campus-like facilities that offer generous on-site amenities like recreation centers, fine dining, parks, walking and biking paths, climbing walls, free snacks, child-care facilities, basketball courts, haircuts and massages, and laundry, dry-cleaning, and car wash operations, in airy spaces often powered by renewable energy sources (Figure 10.5).35 Facebook and Alphabet/Google have plans for building mega-corporate campuses that also include housing. Facebook plans to reserve 15 percent of its housing units for low-income neighbors, but, in both cases, it is anticipated that most residents of these campuses will be employees.36 Presumably, workers who do not have to commute to and from work every day will be happier and more productive.
New workplace arrangements like these effectively serve as fringe benefits for employees that presumably offer the flexibility and work-life balance promised by corporate recruiters. Yet, looking from a different angle, we might consider the motivations behind these complexes to be less than altruistic, because such campuses encourage workers to stay in the office far longer than they might otherwise. Is this the case? Furthermore, if so, do they result in the same or higher levels of productivity? What ethical challenges do they present for the employer and the employee?
Workplace Campuses and Historical Precedents
Traditional workspaces are designed to allow each person to get the maximum amount of work completed each day, spending most of the time alone in a fairly utilitarian environment with minimal distractions. The size and location of the offices indicate status (corner offices are prized), and lunchrooms or cafeterias and water coolers provide the only place for brief social encounters.
State-of-the-art workplaces today, however, incorporate technology and encourage collaboration. Ergonomic furniture is available for comfort, and laptops and tablets allow workers to move around the facility as desktop computers could not. In fact, workers in the new flexible workplace spend less than 50 percent of their time at a desk.37 Moreover, as we discussed in the previous section, many enjoy the flexibility of telecommuting as needed. Furthermore, in open-plan spaces, all work positions locations are alike; status is not signaled by location or size.
LINK TO LEARNING
Watch this promotional video for one technology company whose employees work in a campus-like setting to learn about some of the benefits.
As early as the 1960s, large companies like Bell Labs built suburban compounds for their corporate headquarters, but they were a far cry from the campus settings of Apple and Google today. Bell Labs’ design, for example, was a series of laboratories and office buildings grouped together, with a functional cafeteria.
Workplace campuses are also modeled on university campuses that provide a relatively complete work and living environment for students. As noted, Facebook and Google are building apartments near their corporate campuses. Facebook’s new project, named Willow Village, is near Menlo Park, California, and will include some fifteen hundred units. Employees who lease an apartment there will be eligible for a company bonus.38 The future workplace campuses and mega-corporate campuses with housing bear a superficial resemblance to nineteenth- and early twentieth-century “company towns,” which existed around the world.
In a company town, the stores, entertainment venues, and housing were all owned by the same company, which also employed everyone in a local factory or mine.39 The remote locations of factories sometimes made it necessary for such employers to provide workers with housing and a means to acquire the necessities of life, but those who lived and worked in the company town paid for all purchases from their wages, which, of course, went straight back to the employer. The owners and builders of company towns, like George Pullman or Henry Ford, were often idealists who envisioned creating a social utopia.40 But the towns and their owners could also be paternalistic and self-serving. Indeed, company towns created what is called a monopsony in the labor market, where there is only a single buyer, and the economic analysis of monopsony shows that with the lack of competition for labor, wages of workers are suppressed. That is, “a monopsonist in the labor market can leverage its market power. Because it is the only firm hiring, it can pay its workers less.”41
Company towns began to disappear when cars became affordable and employees could drive to work. However, all that driving lengthened some workdays and disrupted the balance people enjoyed between working hours and personal time. Like telecommuting, corporate villages are one approach to cut down drive time. However, critics of Facebook’s Willow Village are calling the property “Zucktown” and wondering whether the development will further blur the work-life balance for employees of Mark Zuckerberg’s social media company.
CASES FROM THE REAL WORLD
Acuity’s Workplace Campus
Employees at Acuity, an insurance provider in Sheboygan, Wisconsin, enjoy amenities beyond the imagining of the average U.S. worker. The company offers flexible workdays, on-site leadership training, tuition reimbursement for continuing education, and company scholarships. Its \$130 million campus also provides an on-site fitness center complete with a climbing wall, a garden, and a cafeteria serving nutritious meals. Employees are offered the services of an on-site massage therapist, and there are on-site banking and dry-cleaning services.
The campus was designed to be a showpiece at the entrance to the town of Sheboygan. In fact, it features a working Ferris wheel and a theater-in-the-round that seats two thousand, which the company makes available for community events and town hall meetings.
Critical Thinking
• What do you think about a company that would build a multimillion-dollar workplace campus that also serves as a center for community events?
• What does the investment communicate about the company’s core values and stakeholder focus?
• Should company facilities be only for employees?
The Pursuit of Work-Life Balance
Twenty-five percent of U.S. employees in multiple industries were recently surveyed and reported feeling “super stressed” as they juggled work and home responsibilities.42 Daily stress from trying to maintain work-life balance can produce health effects like reduced immunity and inadequate sleep. Stressed workers are also less productive in the workplace.
Efforts to offer employees an ever-widening array of amenities appear to be an effort by employers to create work-life balance and make their companies more desirable as places of employment. The idea is that life is simpler if food is readily available and free at work, if a doctor’s office or hair salon is just down the hall, and if home is right on campus.
Some research shows that millennials believe integrating work and leisure in some combination fosters work-life balance.43 They may see less need to have clear boundaries between their work world and their home life as technology pushes them to be connected in so many ways that once did not exist but now seem inescapable (e.g., an employee of a global firm that conducts business around the clock may never be truly separated from the office due to connectivity provided by mobile devices).
Have employers then crossed a line with these perks? Have they created an expectation that the employee who works on a corporate campus where all needed services are provided will, in turn, be accessible for long hours of work on a regular basis? Are the amenities really velvet handcuffs that tie employees to work? Living right next to work clearly will reduce commuting time, and via this path, it may promote work-life balance. But the expectation that long hours should be routine just because they are possible will hamper, rather than facilitate, the quest for work-life balance. Furthermore, to the extent that mega-corporate campuses do tie workers to their jobs, reduced worker mobility means that labor markets will be less able to adjust to changing conditions.
The Ethical Challenges of Workplace Campuses
It is hard to imagine that anyone could find fault with a job that came with all the amenities of a campus-like environment. However, the all-encompassing aspect of these workplaces means a manager’s job description greatly expands to include small-city management functions. As the April 2018 shooting of employees at YouTube’s headquarters suggests, corporate campuses may have a greater need for security, with duties that dovetail those of the city police. Growth of the compound will challenge managers to comply with city planning and zoning regulations. How should these villages within a city contribute to the municipal services they need for the population they draw? Should the city be able to require a greater tax contribution from mega-corporate campus developers that equals the load they add to the city’s fiscal responsibilities?
CASES FROM THE REAL WORLD
A New Slice of the Apple?
In 2011, Steve Jobs, founder of Apple, appeared before the Cupertino City Council to present his proposal for a new Apple headquarters on the outskirts of the city. The project, which was approved, is known as the “Ring.” It encompasses 2.8 million square feet and cost some \$5 billion to construct. Jobs planned the innovative facility to inspire engineers and programmers charged with creating new Apple devices and tools (Figure 10.6). Its shape is meant to allow them to collaborate while maintaining a connection to nature. Jobs (who died in 2011) also hoped the building would enable Apple to better safeguard its secrets, because it is large enough to house so many employees and data systems in one secure location. The building is sustainable due to solar panels that provide all its energy needs, and the campus includes nine thousand drought-resistant trees planted to withstand a changing climate. Parking is limited by design to encourage employees to use public transportation and share rides.44
Critics, however, say the Ring’s outer-city location and inward-looking shape, giving many in it a view of only the other side of the building, discourage employees from being a part of Cupertino’s life.45 Others argue that remodeling an existing building in the heart of the city would have done more for Cupertino’s local economy. Ninety percent of Ring workers are not local; they commute to their jobs, and so they might not have made an impact on the city even if Apple had made a different decision. Shareholders also objected to the facility because of its cost, which may have reduced Apple’s ability to issue more corporate dividends.46 However, Jobs’ approach to the Apple campus is unquestionably part of a growing trend to create company compounds.
Critical Thinking
• Should a company build in the inner city to integrate its workforce with the community and reduce the traffic consequences of adding its workforce to the local population?
• Is it better for a company to support local restaurants or build its own restaurant facilities?
• Is it ethical for a company to spend so much on building a corporate facility instead of increasing shareholder dividends?
• Should there be zoning laws regarding corporate campuses? | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/10%3A_Changing_Work_Environments_and_Future_Trends/10.03%3A_Workplace_Campuses.txt |
Learning Objectives
By the end of this section, you will be able to:
• Explain the benefits, drawbacks, and ethical issues of job sharing and flextime
• Describe the business models that have emerged in the new millennium
• Discuss the ethical challenges businesses face in the gig economy
New ideas about the way we work and for how long, as well as the business models we use, are challenging many traditional business strategies. Job sharing and flexible hours (or flextime), the access or sharing economy, and the rise of gig workers all force us to evaluate how they affect management, employees, and customers alike. Although new business models provide increased autonomy and flexibility, they have also led to the rise of what some call the new precariat.47 The precariat, for “precarious proletariat,” is a new social class of people whose work offers little predictability or security. The existence of such a class raises ethical dilemmas for business managers, who may be tempted to substitute gig workers, to whom benefits like health insurance are ordinarily not provided, for regular employees entitled to costly benefits.48
Job Sharing and Flextime
In job sharing, two or more employees perform the work of a full-time position, each taking part of the total workload for the job. For example, one job-sharing employee might work three eight-hour shifts a week and the other would take two such shifts at the same job. In some ways, job sharing is simply another name for part-time work. The two people need not work equal numbers of hours, but they perform a single job, doing the same tasks and shouldering the same responsibilities. Unlike nurses, who work shifts but each has their own job, job sharers work one job between them.
Most people in the United States seek a full-time job of thirty-five hours a week or more, usually because they want the income and benefits (such as health insurance) that often come with such a job. But some are willing to forego full-time work because they need or want to care for children or an elderly or ailing family member, pursue their education, run a business on the side, or volunteer. Allowing two people to share a job is an option that can lead to enhanced work-life balance for both individuals. A job-sharing parent can work weekends only, for example, saving on daycare costs during the week.
Many job sharers report less stress and an increased ability to produce high-quality work. Studies have shown that many accomplish more in a shorter workweek due to higher morale.49 Typically there is less absenteeism when the team can plan around the appointments and vacations of each individual.50 Job sharing may also reduce the absenteeism of employees with children by providing increased flexibility to cover family emergencies or obligations. There is even a synergistic effect when two people bring their insights to problems that one person would usually face alone.51
Employers find that hiring two individuals to fill one job also opens the door to recruiting new talent. Job sharing might allow an employer to retain a knowledgeable associate who is ready to cut back work hours. Furthermore, an employee who is leaving or retiring can share the job for a time to train a replacement.
Many job sharers apply for jobs as a team. Those who have successfully shared a job advocate for setting clear performance expectations and progress checkpoints. Two employees might share an e-mail account and brief each other daily on their work.52 Specific examples include translators of legal documents at an international law firm—one translator takes the morning shift; the other, the afternoon. Or technical writers at an engineering firm—one might work Monday through Wednesday noon; the other, Wednesday afternoon through Friday. This scenario works when common documents are being written or translated. If the job sharers are equally competent, work can be passed off to one another at specific intervals.
Other aspects of job sharing actually benefit employers, but not necessarily employees. Replacing a full-time position with two or more part-time employees may allow an employer to avoid paying for the benefits to which a full-time employee would be entitled, such as health insurance mandated by the Affordable Care Act, and sometimes optional benefits as well. The number of involuntary part-time workers varies over the course of the business cycle: In 2009, as a consequence of the Great Recession, U.S. Department of Labor statistics put the number of involuntary part-time workers at more than nine million; in mid-2018, that number was just below five million.53
There are some purely business drawbacks to job sharing. First, the practice does not work in all fields. Second, some work can suffer because of the extra time, and sometimes expense, necessary for coordination between job-sharing partners, especially if neither is formally in charge.54Job-sharing arrangements also presuppose that the two people are going to work together collaboratively, but competitive instincts could lead one partner to withhold information or even sabotage the project. Another drawback is the “two Mondays effect”—the potential productivity loss due to the time it takes each partner to get up to speed on the first day back.55Finally, some managers do not want the added responsibility of managing two people instead of one.
link to learning
Job sharing has many advantages for employees and employers alike. Watch this video about some of the benefits of job sharingto learn more.
The ethical question raised by job sharing boils down to whether the employer is hiring job sharers to improve productivity and meet employee preferences, or hiring part-time workers to improve profitability at the employees’ expense. The ethical employer hires employees to best serve the needs of the customer and the company while respecting the needs of each employee. The first step in ethically managing a job-sharing partnership is to pick the right job to share. Data-entry jobs and those that require less supervision and coordination between partners are more easily managed. Then, with both employees present, the manager should spend some time creating a shared written agreement about procedures to follow and responsibilities to accept.56 Follow-up is important to be sure job sharers are working cooperatively and meeting their goals.
WHAT WOULD YOU DO?
Staffing Trade-offs
You are a department head in a mid-sized clothing manufacturing firm in a time of high unemployment. Your manager is always worrying about the bottom line and cash flow. She has asked you, as marketing employees retire or leave, to split a number of their positions into part-time jobs that do not require the company to offer benefits like health insurance. Your boss says many job applicants want this kind of employment. You are not so sure. You are reluctant to replace jobs offering good benefits with jobs that offer none, and you are seeking powerful arguments with which to persuade your boss to abandon the plan.
Critical Thinking
• What points support the job-sharing plan? How would it benefit the company? The employees?
• What negative effects might it have on the company and the employees?
• Is job sharing better for some positions in a department than for others?
• Do you have any concerns about potential employment discrimination if this plan is implemented? If so, what would they be?
• Is creating job-sharing positions the right thing for the company/customers/employees to do in this situation?
The practice of offering flexible hours, or flextime, lets employees choose their own start and finish time each day, arriving and leaving earlier or later than the normal 9-to-5 workday. Parents benefit particularly because they are better able to schedule their work around their children’s lives. Women are the predominant users of this family-friendly work policy.57
Flextime was a starting place for creative new approaches to work. Teams now trade shifts to accommodate members’ needs for time off. Some companies allow a compressed work week that caters to the efficient employee who can get a week’s work done in less than forty hours. In some professions, such as accounting, employees might be allowed a reduced schedule during the off season.58
All these variations allow employers to recruit a more diverse workforce. No longer is it necessary that someone be free of weekday responsibilities to have full-time work and gainful employment. Flextime also benefits clients and customers because companies can extend their hours of operation when workers are willing to cover flexible shifts.59
Ethical employers base the decision to allow flextime on a clear and well-written policy that relies on objective job-related criteria. Without an objective policy, employees could claim discrimination if all were not eligible.60 Employers should also be aware of the law; in some states, daily work hours are set by law, and allowing some employees to work more than eight hours a day might require payment of overtime.
Some studies have found a troubling bias against employees who request a later start to the workday.61 Managers may incorrectly regard people who prioritize an early start as more desirable employees and attribute a request for a late start to lack of motivation. Managers need greater supervisory skills to ensure flextime workers are using their time productively and to effectively manage teams in which some are working flexible hours and others are not.
The Access Economy and Online Platforms
The access economy is essentially a resource circulation system in which consumers participate on both sides of a transaction, as both providers and obtainers of resources (the transaction is usually facilitated by a third party acting as a go-between). The model, sometimes called peer-to-peer (or P2P), is particularly popular when the asset is expensive to obtain and is not fully consumed by the user (such as a house or condo). In the traditional capitalist economic model, goods are bought and sold by businesses and individuals, but in the access or sharing economy, goods and services are traded on the basis of access rather than ownership.
In this business model, owners make money from underused assets. The global online hospitality marketplace is an example. Airbnb says consumer-hosts in San Francisco who rent out their homes do so for an average of about sixty nights a year, making almost \$10,000 from such rentals. Car owners using the service RelayRides make an average of \$250 a month from allowing others to use their cars. This helps consumers supplement their incomes or even finance the purchase of the assets they share. Many of the original sharing-economy businesses are now household names, including Airbnb, Uber, and Lyft; thousands more are part of the P2P decentralized markets.
Most sharing or collaborative economy business models use the Internet to facilitate transactions, so it might be more accurate to refer to them as part of the online platform economy. However, whereas some facilitate the renting of assets, such as real estate (think Airbnb), others are essentially selling labor (think Task Rabbit), and some bridge the two categories by offering a combination (think Lyft) (see Figure 10.7). The new business models all have something in common, however: a decentralized and democratized marketplace featuring broad-scale participation, with consumers serving multiple roles.
Online and digital business models allow almost anyone to start a business from scratch in what some call the democratization of free enterprise. An economy so open to new players is a significant step toward increased buyer access to goods and services at all levels, even as it raises legitimate questions about how to ensure trust between the transacting parties.
One issue facing the access economy is regulation. For example, should private individuals who rent out rooms be regulated like a Marriott hotel or perhaps a bed-and-breakfast operator, or simply be considered consumers allowing a guest to stay in their house? They are not only subject to income taxes on the money they earn but they are increasingly likely to be charged hotel or occupancy taxes. Some cities have passed ordinances to limit real estate rentals to minimum stays of a week or a month; shorter stays will be considered hotel rentals subject to regulations such as health and safety code rules. In the ride-sharing segment, some cities have said drivers must undergo the same scrutiny as taxi or limousine drivers, such as fingerprinting, commercial licensing, training, and background checks.
The access economy presents an ethical and regulatory challenge for all levels of government—balancing the need to have at least some rules to protect consumers with the desire to allow competition from new business models. Big businesses are lobbying legislative bodies to apply the same regulation to the access economy as to the traditional economy in an effort to reduce or eliminate the threat of competition. This, in turn, raises an ethical question for society as a whole. Traditional means of raising capital, whether through initial public offerings (IPOs) or venture capital, are often dominated by big players. Should access to capital remain limited to those who have influence, or should the government pursue policies aimed at facilitating access to capital by small businesses? In one sign of increasing acceptance of the access economy, traditional businesses are starting to invest in smaller, more nimble, platforms, as the following feature on Oasis Collections demonstrates.
CASES FROM THE REAL WORLD
Oasis Collections
Oasis Collections is a real estate rental marketplace or platform similar to Airbnb, with a few key differences. Founded in 2009, the company fills a market niche by matching house and condo owners with travelers who want something more personal than a hotel but more upscale than a room in someone’s house.
Oasis sought venture capital funding but was turned down multiple times. An IPO was not feasible because the company was too small. This financing quandary demonstrates the limited access to capital that often forms a barrier for entrepreneurial startups to overcome. Oasis’ founders turned to sources often used by entrepreneurs, including a mix of seed funding from founders, friends, and family, and angel funding from a private investor. The company operated on a relatively tight budget for several years.
In 2017, Hyatt Hotels decided to invest \$20 million in Oasis, after it had proven it had a niche in the access economy. Steve Haggerty, Hyatt’s global head of capital strategy, said the investment “reflects Hyatt’s established strategy to super serve the high-end traveler by offering new experiences beyond traditional hotel stays. Travelers who book Oasis Collections homes are . . . leisure and often business travelers who seek more space for a longer time, but also want the peace of mind, personalized service and amenities they expect when staying with Hyatt.”62 Hyatt apparently now sees the access economic model as a force it cannot afford to ignore and has chosen to embrace and fund it. Oasis has the capital to expand its footprint, so CEO Parker Stanberry spends most of his time traveling to sign up new properties and new customers. “We definitely have our work cut out for us,” he says. “We’ve got to hustle hard every day.”63
Critical Thinking
• Can a sixty-year-old traditional hospitality corporation and a new access-economy startup thrive side by side? Or will the experiment crash and burn?
• How likely is it that a big business in a similar type of industry would buy up the related access-economy business or use their market power to crush them instead of integrating the new model as Hyatt did? Defend your answer.
As the Oasis case shows, getting access to funding is often a challenge for entrepreneurs. An IPO is essentially a method of funding a startup by selling its stock to the public at large, a process heavily regulated by the government. The Securities and Exchange Commission (SEC) oversees the applicable federal laws, which require the filing of a registration statement and a full disclosure of financial information, along with months of effort by accountants, attorneys, underwriters, and company executives. The cost and complexity of this process usually outweighs the benefit for entrepreneurs who want to raise a modest amount of capital (\$10 million or less).
However, as a matter of business ethics, businesses of all sizes should be able to participate fully in the U.S. economy and not be shut out by the “gatekeepers of capital”—the investment banking community. Thus, in 2012, Congress enacted new legislation called the JOBS (Jumpstart Our Business Startups) Act, which amended U.S. securities laws to enable small businesses to use a variation on a technique known as crowdfunding. Crowdfunding is already in use as a way to give or lend money to consumers and businesses through web portals such as GoFundMe. But those sites do not offer SEC-compliant sales of securities in a business, as the JOBS Act now permits emerging growth companies (EGCs) seeking capital to do. This new type of funding should help level the playing field for EGCs; many view it as a way of democratizing access to capital.64 One entrepreneurial startup that used this new method successfully is Betabrand, a San Francisco–based retail clothing company that doubles as a crowdfunding platform. The company lets users of its platform crowdsource clothing concepts and develop prototypes into actual products.
link to learning
This website connects to one of several active business-oriented crowdfunding websites to offer emerging growth companies or small business several avenues of funding, including equity, convertible notes, and debt. The primary advantage is the opportunity to raise equity capital without big fees and red tape.
The Gig Economy
Opportunities for limited-term employment, sometimes referred to as “gigs,” have existed for decades in the music and entertainment industry; they have even been likened to the widespread small-scale self-employment typical of the pre-union and pre-Industrial eras.65 What is new about gig work today is that it is often made possible by technology, which frees workers from the need to travel to the employer’s workplace and allows them to work multiple jobs at once. This offers workers, and perhaps even managers, a new set of advantages and disadvantages in the employment equation.
The gig economy is an environment in which individuals and businesses contract with independent workers for short-term assignments, engagements, or projects, offering few or no benefits beyond compensation. A freelancer or contractor is a self-employed worker who may work with more than one client but who usually has a contract that covers the details of the job, including compensation. The terms freelancer and contractor are generally used interchangeably. However, if there is a distinction, it is that a freelancer is almost always self-employed and works for multiple companies, whereas a contractor may or may not be self-employed and may work for only one company at a time (Figure 10.8). Some may be happily committed to their independent status; others are involuntarily self-employed while they search for more permanent or full-time positions. Gigs might be full- or part-time; they might be limited to a specific task or a specific time; and they may serve as the worker’s sole employment or as a “moonlighting” job. Regardless of the terminology, the trend toward a gig economy has begun.
A recent study by Intuit predicted that by 2020, a surprisingly large 40 percent of U.S. workers would be independent contractors, and according to the Freelancers Union, more than 55 million adults in the United States (that is, 35 percent of the U.S. workforce) already work as independent contractors and/or moonlighters.66 The nature of freelance work leaves some workers searching for the qualities of traditional full-time work, and the Freelancers Union has attempted to provide them by giving its more than 375,000 members a voice through policy advocacy and access to some group benefits.67
Many people value the flexibility of freelance work hours. They work off premises (frequently at home), make their own schedules, and juggle assignments as needed. However, benefits such as health care and retirement plans are usually unavailable (unless an employment agency sponsors them for those it places in temporary work). Freelancers most often must establish their own retirement accounts and obtain their own health insurance through an employed spouse or partner or in a health care insurance exchange. Robert B. Reich, the former Secretary of Labor and professor at the University of California, Berkeley, says, “This on-demand economy means a work life that is unpredictable, doesn’t pay very well, and is terribly insecure.”68
Unlike employees on the payroll, gig workers must also pay both the employee’s and the employer’s halves of the federal payroll tax (referred to as FICA [Federal Contributions Insurance Act], which funds Social Security and Medicare). This combined tax currently totals 15.3 percent of a freelancer’s earnings. Payroll taxes overall bring in about 24 percent of combined federal, state, and local government revenue, 69 making them the second-largest source of government revenue in the United States after individual federal income taxes. Here is one of the ethical issues employers face: Are they dodging their fair share of taxes and failing to offer benefits by forcing people who could be their employees into contract work instead?
CASES FROM THE REAL WORLD
Gig Work
Have you ever been a gig worker? A recent study found that 37 percent of U.S. workers participate in the gig economy, and government and other estimates say 40 percent will be working outside traditional full-time jobs by 2020. Clearly the gig economy is not a fad. The issue is often whether it benefits only the company or also the worker. Do people actually like being gig workers, or has the economy forced them into it, sometimes by taking second and third jobs?
A national survey by the Freelancers Union found that two in three of the 55 million U.S. workers who freelanced in 2016 did so because they wanted to, not because they were forced to; the other one-third did it out of necessity.70 Although motivations for gig work may vary, it is clear that employers are benefitting. Of course, part-time contract workers are not new. What is new is the way gig work has spread to many white-collar professions. Here are two examples.
Joseph creates websites for a marketing company and a digital content studio. He also creates and edits motion graphics. “It’s been a fun ride, tiring but fun,” he says. “Finding time is always the struggle. I’m working on a freelance project every weekend.” Joseph thinks gig work has helped him improve his graphic skills faster than he might have done in a traditional job. “I get to move around to different companies, and if one thing falls out, I still have other things I can fall back on—and it keeps me sharp.”
Nicole, a mother of three, is a full-time clerk at a law firm, but she decided she needed extra money and signed up with a work-at-home call center. Her husband has joined too. Nicole says her gig job is one she could continue when she retires, and she likes that possibility. 71
“This is the future of work,” says Diane Mulcahy, a private equities investor whose clients often benefit financially from the use of gig workers. “The full-time employee is getting to be the worker of last resort.”72
Critical Thinking
• Aside from the lack of benefits, what are the potentially negative effects for society of the gig economy?
• What happens to the concept of loyalty between worker and employer if we move to a mostly gig economy? Will that result be negative or positive? For whom, and why?
Microsoft was one of the first companies to save huge amounts of money by hiring contract workers, avoiding paying benefits and payroll taxes and escaping a wide variety of employment and labor laws. However, the company found itself the object of legal action by both the Internal Revenue Service (IRS) and its contract workers on the grounds that a large portion of its contract workforce should have been classified as employees instead.
Microsoft ended up conceding the IRS position that the workers were de facto employees. It issued W-2s (earnings statements) for the workers’ past two years and paid its share of payroll taxes. It hired some of the workers as well, but others sued for fringe benefits they had been denied as freelancers. After lengthy litigation and appeals, in 2000, Microsoft agreed to pay thousands of plaintiffs a total of \$97 million, the value of stock options they would have received if it had employed them. It was the largest settlement ever received by a group of temporary employees. Today, Microsoft has more 110,000 employees, and about 75 percent are temporary or contract workers. However, Microsoft says it now requires staffing companies to give temporary and gig workers it hires fringe benefits.73
A particularly hazy work relationship exists between employers and interns. Many business or other professional-track students seek—indeed, are encouraged to find—internships while still in school. Sometimes these positions are paid, sometimes not; some carry academic credit and some do not. The tasks interns perform, and therefore the quality of the professional experiences they gain, can vary widely. However, many interns clearly function as a source of unpaid labor. Ethical boundaries are often crossed, even if students are willing to undertake these positions. Although state labor laws governing internships vary, responsible companies will insist that their interns are paid for their services or receive academic credit, or both. | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/10%3A_Changing_Work_Environments_and_Future_Trends/10.04%3A_Alternatives_to_Traditional_Patterns_of_Work.txt |
Learning Objectives
By the end of this section, you will be able to:
• Discuss the application of robotics and the workplace changes it will bring
• Identify artificial intelligence applications in the workplace
• Explain the ethical challenges presented by the use of artificial intelligence
As we have seen earlier in this chapter, general advances in computer technology have already enabled significant changes in the workplace. In this module, we will look at how future workforce demographics may be affected by existing and emerging technologies. The combination of automation and robotics has already changed not only the workplace but everyday life as well. It also comes with a host of ethical and legal issues, not least being where humans will fit in the workplace of tomorrow. Managers of the future may ask, “Does my company or society benefit from having a human do a job rather than a robot, or is it all about efficiency and cost?”
Robotics and Automation in the Workplace
Advances in the field of robotics—a combination of computer science, mechanical and electronics engineering, and science—have meant that machines or related forms of automation now do the work of humans in a wide variety of settings, such as medicine, where robots perform surgeries previously done by the surgeon’s hand. Robots have made it easier and cheaper for employers to get work done. The downside, however, is that some reasonably well-paying jobs that provided middle-class employment for humans have become the province of machines.
A McKinsey Global Institute study of eight hundred occupations in nearly fifty countries showed that more than 800 million jobs, or 20 percent of the global workforce, could be lost to robotics by the year 2030.74 The effects could be even more pronounced in wealthy industrialized nations, such as the United States and Germany, where researchers expect that up to one-third of the workforce will be affected. By 2030, the report estimates that 39 million to 73 million jobs may be eliminated in the United States. Given that the level of employment in the United States in mid-2018 is approaching 150 million workers, this potential loss of jobs represents roughly one-quarter to one-half of total current employment (but a smaller share of employment in 2030 because of future population and employment growth).
The big question, then, is what will happen to all these displaced workers. The McKinsey report estimates that about twenty million of them will be able to transfer easily to other industries for employment. But this still leaves between twenty million and more than fifty million displaced workers who will need new employment. Occupational retraining is likely to be a path taken by some, but older workers, as well as geographically immobile workers, are unlikely to opt for such training and may endure job loss for protracted periods.
In developing countries, the report predicts that the number of jobs requiring less education will shrink. Furthermore, robotics will have less impact in poorer countries because these nations’ workers are already paid so little that employers will save less on labor costs by automating. According to the report, for example, by the same date of 2030, India is expected to lose only about 9 percent of its jobs to emerging technology.
Which occupations will be most heavily affected? Not surprisingly, the McKinsey report concludes that machine operators, factory workers, and food workers will be hit hardest, because robots can do their jobs more precisely and efficiently. “It’s cheaper to buy a \$35,000 robotic arm than it is to hire an employee who’s inefficiently making \$15 an hour bagging French fries,” said a former McDonald’s CEO in another article about the consequences of robots in the labor market.75 He estimated that automation has already cut the number of people working in a McDonald’s by half since the 1960s and that this trend will continue. Other hard-hit jobs will include mortgage brokers, paralegals, accountants, some office staff, cashiers, toll booth operators, and car and truck drivers. The Bureau of Labor Statistics (BLS) estimates that eighty thousand fast-food jobs will disappear by 2024. As growing numbers of retail stores like Walmart, CVS, and McDonald’s provide automated self-checkout options, it has been estimated that 7.5 million retail jobs are at risk over the course of the next decade. Furthermore, it has been estimated that as self-driving cars and trucks replace automobile and truck drivers, five million jobs will be lost in the early 2020s.
Jobs requiring human interaction are typically at low risk for being replaced by automation. These include nurses and most physicians, lawyers, teachers, and bartenders, as well as social workers (estimated by the BLS to grow by 19 percent by 2024), hairstylists and cosmetologists, youth sports coaches, and songwriters. McKinsey also anticipates that specialized lower-wage jobs like gardening, plumbing, and care work will be less affected by automation.
The challenge to the economy, then, will be how to address the prospect of substantial job loss; about twenty million to fifty million people will not be able to easily find new jobs. The McKinsey report notes that new technology, as in the past, will generate new types of jobs. But this is unlikely to help more than a small fraction of those confronting unemployment. So the United States will likely face some combination of rapidly rising unemployment, an urgent need to retrain twenty million or more workers, and recourse to policies whereby the government serves as an employer of last resort.
ETHICS ACROSS TIME AND CULTURES
Advances in Robotics in Japan
Japan has long maintained its position as the world’s top exporter of robots, selling nearly 50 percent of the global market share in terms of both units and dollar value. At first, Japan’s robots were found mainly in factories making automobiles and electronic equipment, performing simple jobs such as assembling parts. Now Japan is poised to take the lead by putting robots in diverse areas including aeronautics, medicine, disaster mitigation, and search and rescue, performing jobs that human either cannot or, for safety reasons (such as defusing a bomb), should not do. Leading universities such as the University of Tokyo offer advanced programs to teach students not only how to create robots but also how to understand the way robot technology is transforming Japanese society. Universities, research institutions, corporations, and government entities are collaborating to implement the country’s next generation of advanced artificial intelligence robot technology, because Japan truly sees the rise of robotics as the “Fourth Industrial Revolution.”
New uses of robots include hazardous cleanup in the wake of the 2011 earthquake and tsunami disaster that destroyed the Fukushima Daiichi nuclear power plant. After those events, Japan accelerated its development and application of disaster-response robots to go into radioactive areas and handle remediation.
In the laboratory at the University of Tokyo School of Engineering, advances are also being made in technology that mimics the capabilities of the human eye. One application allows scientists a clear field of vision in extreme weather conditions that are otherwise difficult or impossible for humans to study.
Japanese researchers are also developing a surgical robotic system with a three-dimensional endoscope to conduct high-risk surgery in remote mountainous regions with no specialized doctors. This system is in use in operating rooms in the United States as well, but Japan is taking it a step further by using it in teletherapy, where the patient is hundreds of miles away from the doctor actually performing the surgery. In Japan’s manufacturing culture, robots are viewed not as threats but as solutions to many of the nation’s most critical problems. Indeed, with Japan’s below-replacement fertility since the mid-1970s, Japan’s work force has been aging quite rapidly; in fact, beginning in the period from 2010 to 2015, the Japanese population started shrinking. Clearly, robots are potentially quite important as a means to offset prospective adverse consequences of a diminishing labor force.
Critical Thinking
• Does using robots cause a loss of jobs, a shifting of jobs, or both? How should society respond?
• How might the use of robots add to the increasing inequality in the U.S. economy?
• Do companies have an ethical responsibility to their workers to training or other support to workers displaced by automation?
Artificial Intelligence
Although some robots are remotely controlled by a human operator or a computer program written by a human, robots can also learn to work without human intervention, and often faster, more efficiently, and more cheaply than humans can. The branch of science that uses computer algorithms to replicate human intelligent behavior by machines with minimal human intervention is called artificial intelligence (AI). Related professions in which the implementation of AI might have particular impact are banking, financial advising, and the sales of securities and managing of stock portfolios.
According to global consulting giant Accenture, AI is “a collection of advanced technologies that allows machines to sense, comprehend, act and learn.” Accenture contends that AI will be the next great advance in the workplace: “It is set to transform business in ways we have not seen since the Industrial Revolution; fundamentally reinventing how businesses run, compete and thrive. When implemented holistically, these technologies help improve productivity and lower costs, unlocking more creative jobs and creating new growth opportunities.”76 Accenture looked at twelve of the world’s most developed countries, which account for more than half of world economic output, to assess the impact of AI in sixteen specific industries. According to its report, AI has the potential to significantly increase corporate profitability, double rates of economic growth by 2035, increase labor productivity by as much as 40 percent, and boost gross value added by \$14 trillion by 2035, based on an almost 40 percent increase in rates of return.77 Even news articles have begun to be written by robots.78
link to learning
Read this article about AI and its applications and watch this video about how automation and AI are changing the accounting profession to learn more. Also, read this article about how some startups are creating new AI-related technology and products to automate accounting systems to learn more.
A report by KPMG, another global consulting and accounting firm, indicates that almost 50 percent of the activities people perform in the workplace today could be automated, most often by using AI and automation technology that already exist. The ethical question facing the business community, and all of us on a broader level, is about the type of society in which we all want to live and the role automation will play in it. The answer is not simply about efficiency; a company should consider many variables as it moves toward increased automation (Figure 10.9).
For example, as AI programs become better able to interact with humans, especially online, should a company be required to inform its customers if and when they are dealing with any form of AI and not a person? If people cannot tell when they are communicating with an AI program and not a human being, has an AI-controlled computer or robot reached a form personhood? Why or why not? Although traditional business ethics can provide us with a starting place to answer such questions, we will also need a philosophical approach, because we also need to decide whether it is necessary to have consciousness to be considered a person. This issue is further muddied when a human employee largely is tapping AI i to serve customers or clients. Should this combination of human and AI assistance be made patently clear?
Another issue in AI and all forms of automation is liability. According to Reuters News, “lawmakers in Europe have agreed on the need for [European Union]-wide legislation that would regulate robots and their use, including an ethical framework for their development and deployment, as well as the establishment of liability for the actions of robots, including self-driving cars.”79 The legal and ethical questions in assigning liability for decisions made by robots and AI are not only fascinating to debate but also an important legal matter society must resolve. The answers will one day directly affect the day-to-day lives of billions of people. | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/10%3A_Changing_Work_Environments_and_Future_Trends/10.05%3A_Robotics_Artificial_Intelligence_and_the_Workplace_of_the_Future.txt |
Section Summaries:
10.1 More Telecommuting or Less?
Remote workers save themselves the time and cost of a commute and are better able to balance work and home life. Companies often benefit from the higher productivity and lower turnover of telecommuting employees, and they can also provide a social benefit by permitting employees to avoid commuting, reducing traffic congestion and pollution. Some challenges of telecommuting for the manager are maintaining the privacy of the firm’s data, transmitting corporate culture, defining performance objectives, and encouraging collaboration. Employees have the challenge of remaining focused on work when they are working elsewhere. Ethical companies support their remote workers by developing and encouraging trust and guarding against abuse. They also set clear and equitable expectations and rewards to ensure fairness and keep open the lines of communication.
10.2 Workplace Campuses
Traditional office buildings with separate workspaces for each worker are giving way to multifunctional worksites where employees are encouraged to actively collaborate. Some companies have expanded the workplace to include restaurants, recreation facilities, and convenient amenities to attract and retain employees. Other companies are building villages around their campuses to assist employees seeking to balance work and home life. These all-encompassing work environments have some potential downsides for employees, however, including a risk of tethering them to their workplaces. Their effects on local communities are being questioned as well.
10.3 Alternatives to Traditional Patterns of Work
When undertaken with equity and fairness, job sharing and flextime can create flexibility for workers who need or want to limit their hours. These practices allow employers to recruit more diverse employees, help them meet employees’ need for work-life balance, and, in the case of job sharing, bring more than one person’s perspective to problem solving. However, employers must clearly spell out expectations and procedures for each employee to ensure success.
Given flexible hours and job-sharing arrangements, the traditional employment-based U.S. economy appears to be in transition toward new business models that offer many opportunities but also serious challenges. Ethical issues in the access economy include the responsibilities of each of the parties in a sharing transaction and the character of any regulation, including taxes, that may be passed. In the gig economy, they include workers’ insecure positions and lack of benefits, employers’ responsibility for paying their fair share of social insurance (payroll) taxes, and the fair treatment of interns.
10.4 Robotics, Artificial Intelligence, and the Workplace of the Future
Initially, robots and AI inspire both intrigue and fear in most of us. Fear of losing jobs is a reality, but so too is intrigue about what the future holds. A key for companies is to help workers retrain to become part of that future.
Key Terms
access economy
a nontraditional business model in which consumers participate on both sides of a transaction, sometimes facilitated by a third party
artificial intelligence (AI)
the branch of science that uses computer algorithms to replicate human intelligent behavior by machines with minimal human intervention
flextime
a work schedule in which employees can select their own start and finish time
gig economy
an environment in which individuals and businesses contract with independent workers for the completion of short-term assignments, engagements, or projects, offering few or no benefits beyond compensation
job sharing
the use of two or more employees to perform the work of one full-time position
robotics
a field of research that includes computer science, mechanical and electronics engineering, and science process with the objective to produce robots, or related forms of automation, to replicate human tasks
telecommuting
working from a remote location (home or other space) by means of electronic connections | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/10%3A_Changing_Work_Environments_and_Future_Trends/10.06%3A_Summary.txt |
Even though they are business decisions, the choices we make at work can be personal in that they begin with our use of conscience. Just as the human body requires nourishment and care, so the conscience needs attention. Developmental psychologists have long understood that the formation of conscience, and the emergence of an individual in whom being and doing are comfortably aligned, take place over time. There are no shortcuts. Imperfection, self-doubt, and mistakes are part of the process. But what counts in life—including our choice of profession as well as the way we live our personal lives—is the manner in which we apply wisdom, education, and experience in forming the decisions we make and in becoming the person we wish to be.
Facing the right direction may be difficult at first, but with each decision toward wholeness, the path becomes a little easier to tread. The reverse is also true. When we neglect or ignore our conscience, it becomes more difficult for us to turn around. This final chapter explores the process of becoming a professional with an unshakeable ethical stance in a changing world. Where do you stand on your own path in life, and more important, which direction are you facing (Figure 11.1)? In which direction will your choices regarding your work and career take you?
11.02: Business Ethics in an Evolving Environment
Not only does the world seem to have shrunk, but the twenty-first century pace of change seems to have sped up time itself. As the world becomes smaller and faster and companies adapt their practices to fit new conditions, the core of business ethics that guides corporate behavior remains the same, directed, as always, by shared values and morals as well as legal restraints. What happens when these are ignored? An example follows:
Rajat Gupta grew up in India, earned an MBA from Harvard, and prospered for years as managing director of McKinsey & Company, a preeminent management consulting firm. A respected business leader and cofounder of the Indian School of Business and the American Indian Foundation, Gupta served on many corporate and philanthropic boards. “Gupta was commended by people who knew him as a person who helped others. He was very active in providing medical and humanitarian relief to the developing countries. Born to humble circumstances, he became a pillar of the consulting community and a trusted advisor to the world’s leading companies and organizations.”1 According to the Securities Exchange Commission, however, in 2009, Gupta provided hedge-fund manager and longtime friend Raj Rajaratnam with insider information about investor Warren Buffet’s agreement to purchase shares in Goldman Sachs, an investment bank for which Gupta served as a corporate director. Gupta was convicted of felony securities fraud relating to insider trading (three counts) and conspiracy (one count) and sentenced to two years in jail plus \$5 million in fines.2 He had chosen to violate both business ethics and the law, as well as breaching his fiduciary duty as a corporate director.
When corporate managers follow codes of conduct in a virtuous fashion, the outcome is positive but tends not to make the news. That is not a bad thing. We should value ethical behavior for its own sake, not because it will draw media attention. Unethical behavior, on the other hand, is often considered newsworthy, as were the crimes of Rajat Gupta. In discussing his case, the Seven Pillars Institute for Global Finance and Ethics (an independent, nonprofit think tank based in Kansas City, Missouri, that helps raise public awareness about financial ethics) said, “As a true professional, the good manager strives to achieve a moral excellence that includes honesty, fairness, prudence, and courage.”3 These are some of the virtues ethical players in the corporate world display.
Respected businesses and managers adhere to a well-thought-out vision of what is ethical and fair. The primary purpose of business ethics is to guide organizations and their employees in this effort by outlining a mode of behavior that proactively identifies and implements the right actions to take, ones that avoid lapses in judgment and deed. For instance, as we saw in Defining and Prioritizing Stakeholders, identifying the needs and rights of all stakeholders, not just of shareholders, is a useful first step in fair and ethical decision-making for any business organization. The box that follows describes what happened when General Motors forgot this.
CASES FROM THE REAL WORLD
General Motors’ Failure to Consider Stakeholders
General Motors (GM) has struggled with its brands and its image. Over the years, it has jettisoned some of its once-popular brands, including Oldsmobile and Pontiac, sold many others, and climbed back from a 2009 bankruptcy and reorganization. The automaker was hiding an even bigger problem, however: The ignition switch in many of its cars was prone to malfunction, causing injury and even death. The faulty switches caused 124 deaths and 273 injuries, and GM was finally brought to federal court. In 2014, the company reached a settlement for \$900 million and recalled 2.6 million cars.
The case exemplifies the tension between the concept that “the only goal of business is to profit, so the only obligation that the business person has is to maximize profit for the owner or the stockholders” on one hand, and the ethical obligations a company owes to its other stakeholders on the other.4 GM’s failure to consider its stakeholders and consumers when choosing not to report the potential for malfunction of the ignition switches led to an ethical breakdown in its operations and cost the company and its customers dearly. In addition, by treating customers as only a means toward an end, the company turned its back on a generation of loyal buyers.
Critical Thinking
• What virtues and values shared by its long-time customers did General Motors betray by failing to disclose an inherent danger built into its cars?
• How do you think that betrayal affected the company’s brand and the way car buyers felt about the firm? How might it have affected its shareholders’ views of GM?
At first glance, you might not see many parallels between the purchase of a flask of wine in an ancient Greek marketplace and your online purchase of a week’s worth of groceries with a single click. In both cases, however, and throughout all the generations in between, buyers and sellers would agree that customers are entitled to be treated with honesty and accorded fair value for their money. Business leaders should approach ethical issues with the same sense of the permanence of ethical values. Technological innovation has changed the business environment and our lives, but it does not change the basis on which we make ethical business decisions. It does however, cause us to expand the application of our ethical standards to new situations.
For example, ethical principles are now being applied to online business. One reason is so that managers can navigate the privacy issues raised by the wholesale collection and sharing (intentional and otherwise) of customer data.
“The big ethical dilemmas of the twenty-first century have mostly centered on cybercrimes and privacy issues. Crimes such as identity theft, almost unheard of twenty years ago, remain a huge threat to anyone doing business online—a majority of the population. As a result, businesses face social and legal pressure to take every measure possible to protect customers’ sensitive information. The rise in popularity of data mining and target marketing have forced businesses to walk a fine line between respecting customers’ privacy and using their online activities to glean valuable marketing data.”5
Which values are at play on the two sides of this dilemma? Which stakeholders are priorities at companies like Facebook and Equifax?
Another ethical dilemma arises for managers when government policy collides with a multinational corporation’s global ethical standards. Although this clash can occur in many industries, the information industry offers a useful example. Google’s stated mission is to “Organize the world’s information and make it universally accessible and useful.” From its founding, says the company’s website, “our goal has been to develop services that significantly improve the lives of as many people as possible. Not just for some. For everyone.”6 This may not hold true in all Google’s markets, however.
“In 2006, [Google] launched a Chinese-language website in China and, contrary to its global ethical standards opposing censorship, agreed to Chinese government demands to eliminate links which the authorities found objectionable. For example, when a Web-surfer searched ‘Tiananmen Square’ on Google’s Chinese-language website in Los Angeles, reports of the 1989 demonstrations popped up. Not so if the same surfer entered the same words on Google’s Chinese-language site in Beijing (at various times either nothing or innocuous history came up).”7
In 2010, Google withdrew from China for a time, but it still wants to crack the huge market that country represents. It currently makes two applications available to Chinese users, but Gmail, YouTube, Google maps, and its search engine remain largely banned by the government.8 Does Google have an obligation to follow its own internal value of providing information to its users, or to respect China’s policy of censorship? Is its current strategy in China coherent, or does it open the door for ethical lapses?9
Consider one more of the many general ethical challenges managers of global businesses now face. The Cheesecake Factory, the California-based restaurant chain that prides itself on large portions and sumptuous desserts, opened a restaurant in Hong Kong in May 2017. Since then, the restaurant has been overwhelmed by customers intent on having not just a slice of cheesecake but an “American” experience. The restaurant’s menu is the same in all of its two hundred stores around the world. Whether you are eating in Los Angeles, Hong Kong, or Dubai, you can order dishes with mozzarella, fontina, parmesan, cheddar, feta, or Swiss cheese, along with plenty of bacon, sour cream, and potatoes (Figure 11.2). The interior decor is also the same wherever you go, guaranteeing a uniform experience.10
Does it raise any ethical issues for the Cheesecake Factory not to tailor its offerings to local tastes and norms, as competing chains have done? People in Hong Kong, for example, normally eat a diet with fewer calories and dairy products and that is much lower in fat and sugar than is typical in the United States. As one young customer at the Hong Kong outlet exclaimed, “Chinese people just cannot handle this much cheese.”11
Yet the company is offering a product the great majority of the public wants. Does it owe them anything in addition? That is, does the Cheesecake Factory have an obligation to give customers what they need, rather than what they want? In many parts of the world, there is pronounced desire for many things American, in particular, and Western, in general. Do Western companies have a primary mandate simply to meet this want, or do they have an obligation to deliver what is better for others? This is a core ethical consideration that has implications for companies far beyond simple marketing strategies and tactics. To impose certain products and services on other cultures because Western nations believe these would be best for them certainly would be a form of imperialism. However, for corporations to satisfy expressed wants could be applauded as an honorable response to customers identifying their own preferences. To preemptively decide what ought to be consumed by others—because it is for their own good—might be a form of paternalism. Ultimately, do customers or do companies have the right to make these decisions?
You might answer that it would depend on the company and its products or services, and you would be right to see it in this light. What is unmistakable, however, is that these truly are decisions fraught with ethical dimensions. Business leaders must become accustomed to considering them in this way. | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/11%3A_Epilogue-_Why_Ethics_Still_Matter/11.01%3A_Introduction.txt |
Professional values and ethical reasoning are traits valued by all good employers. In fact, we have seen throughout this book that employees’ sound ethical decisions lead to higher profits in the long run. How do we develop the ability to make such decisions? We will see in the coming paragraphs that it takes discipline, commitment, and practice. Strong work and personal relationship matters, too.
Relationships Matter
Workplace research indicates that employees are more likely to be unethical when they are dissatisfied with their jobs or see their superiors acting unethically.12 How do relationships influence this equation? A good example set at the top and the freedom to determine a comfortable work-life balance for oneself—all influenced by the organization’s positive relationship with its employees—lead to a more ethical workplace. Consider Walmart’s relationships with its many employees.
CASES FROM THE REAL WORLD
Walmart: “Save Money. Live Better.”
With annual revenues of almost half a trillion dollars (2017), 2.3 million employees, and nearly twelve thousand stores worldwide, Walmart is the largest private employer on the planet (Figure 11.3).13 In fact, it is bigger than many national economies, including some in the developed world. In 2007, it replaced its longstanding slogan, “Always Low Prices,” with “Save Money. Live Better.”14
Walmart attempts to demonstrate virtuousness by holding itself out as a responsible corporation, concerned especially for the lower-income families that make up the majority of its customers.16 But the company has experienced problems over the years, including lawsuits over illegal firing of employees, withholding of overtime pay and benefits, violations of foreign workers’ rights, wage violations, violations of child labor laws, and failure to provide health coverage where and when applicable.17
Thousands of Walmart’s U.S. employees are also reported to be receiving public assistance to make ends meet.18Meanwhile, the Walton family, operators of the retailer that purports to help people “live better,” recently made \$12.7 billion in a single day.19
Critical Thinking
• If you were an upper-level manager at Walmart, what kinds of decisions would you expect to make regarding the company’s challenges?
• As a Walmart manager, how would you view the company’s relationships with its stakeholders, including its employees? How would that view guide your decision-making?
• As a company executive, would you try to increase employee benefits? Why or why not?
Where does a case like Walmart’s leave us? If a corporation with 2.3 million employees globally has reason to be concerned that at least some are dissatisfied with the job and may have witnessed some degree of unethical management behavior, the firm might also need to assume that some of those employees could choose to act unethically in the course of any business day. Of course, no job is perfect, and most of us experience some Monday mornings when we do not necessarily want to go into the office or exert the energy to be productive. And a company that provides high-quality goods to consumers at relatively low prices should get at least some credit for treating consumers fairly and ethically. It remains true, however, that any firm that wishes its employees to act ethically in the workplace must develop managers who model such behavior consistently toward all the company’s stakeholders. No other single act on the part of business leaders is as important as this in fostering ethical behavior on the part of employees.
Using Values to Make Hard Choices
According to the logic of the market, each of us is a commodity with specific assets, such as education, training, and job experience. But we are more than commodities, and what moves us are values. Can you identify your core values and imagine how you might live them in the workplace (Figure 11.4)? We’ll return to this question at the end of the chapter.
To make the difficult decisions that come with career, personal life, and the balance between both, we must identify our personal values. Values provide us with the why for doing what we do. As an entrepreneur, for instance, you may find yourself working nonstop, dealing with emergency phone calls at 3:00 a.m., and doing a great deal of soul-searching about the direction and culture of your new venture. These tasks collectively might serve as impediments to happiness unless they truly reflect your underlying values.
The Role of Loyalty
Customers often remain loyal to a brand because of its appearance, functionality, or price. Companies want loyal customers like these and will go to great lengths to keep them. These relationships are external relationships between the company as an organization and its customers as a group.
Internal relationships exist among people, including among managers, employees, suppliers, and distributors. The loyalty that forms good internal relationships and enables us to rely on one another to do our work is a matter of trust and develops over time. Although it may be tested by rivalry, resentment, misunderstanding, and personality or other conflicts, without such trust, a company cannot function properly.
However, as we have seen, loyalty between employee and employer is a two-way street. The organization takes the first step by hiring a candidate in whom it will invest time, training, and money, and whose success it will reward with recognition, raises, and bonuses. No employer wants to spend time and money nurturing new talent only to see people leave for another firm. Therefore, it falls to the new professional, in turn, to decide whether his or her values align with those of the organization, and if so, to demonstrate a commitment to grow with the company over time. Achieving such clarity about your career goals, the type of company you would be proud to work for, and your vision of your future self requires some self-scrutiny. In the process, you will further clarify your personal and ethical values and start to become an ethical professional. | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/11%3A_Epilogue-_Why_Ethics_Still_Matter/11.03%3A_Committing_to_an_Ethical_View.txt |
“‘Professionalism’ is the conduct, aims or qualities that characterize or mark a profession or professional person. It implies there is a quality of workmanship or service. But in reality, it’s more about ethical behavior in the workplace. Every organization knows that a professional and ethical reputation is the difference between success and failure, and they seek to keep those staff who are the most professional.”20
Ethical professionals work for companies whose values align with their own. How do you evaluate a company to see whether it is a good occupational fit and one that will allow you to live your ethical values every day?
Finding the “Right Fit”
Ethics has become a major consideration for young people in their selection of work and career. The following observation about young British workers applies to their counterparts in the United States, as well: “There’s a quiet revolution happening. . . but it’s not about pay, hours or contracts. It’s a coup d’état led by the nation’s young, politically engaged jobseekers who demand employers enshrine values and ethics in their business model, not just profit.”21
Many job seekers want to feel that what they are doing is not just making money but making a difference, that is, contributing to the company in unique ways that reflect their core values, conscience, and personality. They believe an individual has worth beyond his or her immediate work or position. Many modern companies thus try to give greater weight to the human cost of decisions and employee happiness. They know that, according to studies, employees in “companies that work to build and maintain ethical workplace cultures are more financially successful and have more motivated, productive employees.”22 The decision whether to transfer someone from Boston to Salt Lake City, for instance, would now likely include the employee from the beginning and consider the impact on family members and the employee’s future, in addition to the needs of the company.
This was not always the case, and there are several reasons for the change. The first is that satisfied employees are more productive and feel greater commitment to the organization.23 Second, there are more options for job seekers, which gives them more freedom to choose a company for which to work.
“When we graduate from school, or whenever we are thinking about changing jobs, we are matching three things in deciding on our “vocation”—the job market (Are there jobs and opportunities?), our skills (Do I have the right skills to succeed in a particular job?) and our passions or beliefs (What do I want to do?) [with the concept that] worthwhile work can be found in working in a corporate culture that respects its workers and their personal lives. You may work where management is supportive and workers thrive and advance, but you can also find yourself working in a toxic environment where human dignity is torn down every day and responding to one’s family commitments is regarded as weaknesses.”24
Many business journals report annually on how highly employees rate their work places (Figure 11.5). For example, you can consult Fortune’s annual list of “100 Best Companies to Work For,” which you can search by such factors as diversity, compensation, and paid time off. You can also consult specialized lists such as Forbes’ “100 Best Workplaces for Women” and Black Enterprise’s “50 Best Companies for Diversity.”
A third reason more companies are considering what truly makes employees happy is that even more than loyalty, employees appear to value the freedom and responsibility to act as moral agents in their own lives. A moral agent is someone capable of distinguishing right from wrong and willing to be held accountable for his or her choices.
The exercise of moral agency includes making a judgment about the alignment of personal and corporate conscience. Rather than jumping at the first job offer, moral agents assess whether the values expressed by the organization conform with their own, while recognizing that there is no perfect job. Even the most ethical organizations make mistakes, and even the most corrupt have managers and workers of integrity (Figure 11.6). This is why the “right fit” is more likely to be a job in which you can grow or that itself will change in a way that allows you to find greater meaning in it.
It’s Not About the Money—Is It?
You may follow a professional vocation that offers low pay or low status but yields nontangible rewards, such as nonprofit work, nursing, or teaching. Or you may find a position that pays a great deal and offers job security but leaves you feeling unhappy or unfulfilled. For some professionals, these might include law, accounting, dentistry, or anything else. The point is that occupations with high compensation and a certain stature do not always infuse their holders with the greatest psychological and emotional rewards, and it is different for each of us. In the best of all worlds, you might embark on a well-paying career that helps others or contributes a much-needed good or service to society. Finding such work is easier said than done, of course, because the aim of most jobs is not to help people find meaning or happiness. Where these do occur, they are often ancillary effects of work, whose real purpose is the profitability without which there would not be any jobs at all.
Also consider the gap between the purpose of the business and the purpose of the individuals in it. Except in a few startups, these purposes are not identical. Even artists, musicians, and independent practitioners who derive great meaning from their work are not immune to the frustrations over money or career that affect everyone else.
It has been estimated, however, that the amount of money needed to be happy is not actually that much, at least by Western standards, although it is well above the poverty line.25 Most people find themselves somewhere in the middle in terms of satisfaction and pay. Finding the proper balance between the two for you is taking a step on the way to your growth as a professional. You will make that assessment not once but throughout your career as you move in and out of jobs. Even if it turns out to be the best decision of your life, the choice to work for a company because of its mission, leadership, or cultural values should be intentional and based on sufficient knowledge of the company and yourself. To be appreciated for your contributions in the workplace, to work with congenial colleagues, or to provide a product or service of which you are proud might rival money as your most intrinsic motivator at work. Studies attest to this and, as professionals of integrity, we must each decide for ourselves how strong a benefit salary alone is in the jobs we select.
Link to learning
Watch the TEDx presentation “Money Can Buy Happiness” about money and its relationship to happiness to learn more.
The Role of Ethical Top Leadership
As you consider your future path, perhaps leading toward a leadership role, keep in mind that perhaps the most effective way ethical behavior is learned in a company is through the modeling of that behavior by senior executives and others in leadership positions. This modeling sets what is known as “tone at the top.” Employees may already have a personal moral code when they join an organization, but when they see key figures in the workplace actually living out the ethical values of the company, they are more likely to follow suit and take ethics seriously. Leaders’ ethical behavior is especially important in emerging fields like artificial intelligence, where questions of safety, bias, misuse of technology, and privacy are raised daily.26 It is not enough to offer codes of conduct, training, reporting, and review programs, no matter how thorough or sophisticated, if management does not adhere to or promote them. These are tools rather than solutions. The solutions come from leaders using the tools and showing others how to do the same. This takes practice, reinforcement, and collaboration at all levels of an organization. The result will be a culture of ethics that permeates the company from top to bottom.
Even leaders can falter, as the following box demonstrates. Also read the stories of ten ethical leaders in the appendix Profiles in Business Ethics: Contemporary Thought Leaders.
CASES FROM THE REAL WORLD
Swanson’s Rule #1: Don’t Plagiarize
Bill Swanson, former CEO of the defense contractor Raytheon, became well known for publishing a booklet entitled Swanson’s Unwritten Rules of Management, which included thirty-three brief maxims for achieving success in business and cultivating a virtuous life in the corporate world.27 The list included items like the famous “Waiter Rule,” which held that you can judge a person’s character by the way he or she treats those in subservient positions.
Swanson was hailed as a sage of modern business whose rules had saved companies like Czar Entertainment and Panera Bread from making bad hiring decisions.28 Then it was discovered that he had plagiarized the list from several sources.29 The booklet was discontinued and Swanson’s compensation and retirement package was modified downward.30 As in similar cases of ethical lapse, however, the greatest damage was to his reputation, despite an otherwise distinguished 42-year career.31
Critical Thinking
• Does this case surprise you? Why or why not?
• What do you think is the effect on a company’s employees of unethical behavior at the top?
Ethics matter not merely because acting unethically will end in a compliance problem or public relations nightmare but because ethics is a way of life, not a hurdle to overcome. Moreover, the benefit of ethical behavior can grow over time so that a company begins to attract other ethical professionals and develops a reputation for honesty, integrity, and dependability. In a globally competitive world, these are not inconsequential factors. In an ethical workplace, employee satisfaction creates more loyalty to the company and morale improves because employees and managers feel they are part of an effort they can be proud of. Business performance picks up in ways ranging from higher earnings per share to increased customer retention to more satisfied employees.
Consider the net income of two corporations that, as of 2018, have appeared on eleven consecutive annual lists of the world’s most ethical companies as determined by the Ethisphere Institute (https://ethisphere.com). The first is United Parcel Service (UPS), founded in 1907, which earned net income of \$4.91 billion in 2017.32 The second is Xerox, founded in 1906, which earned net income of \$195 million in 2017.33 Notice the staying power of these two companies, as well. Each is more than a century old and has a global presence. To test the consumer confidence these corporations evoke, consider your own opinion of how reputable they are. Ask your friends and family, too.
Again, employee loyalty, a positive work environment, and strong financial performance are not accidents; they are the result of intentional efforts on the part of leadership and board members who provide ethical vision and a plan for execution to all stakeholders. Ethical business need not be a zero-sum game with winners and losers; it can create situations in which everyone wins. Is there a more attractive environment for those just starting out in their careers? To be part of something profitable, responsible, and individually uplifting justifies all the work required to get there. | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/11%3A_Epilogue-_Why_Ethics_Still_Matter/11.04%3A_Becoming_an_Ethical_Professional.txt |
On what will you base your professional identity? Do you believe an employer’s enlightened self-interest is enough to ensure the ethical behavior of employers and employees? Or do you embrace “the critical importance of individual ethical choice in making our organizations, our professions and our culture serve all of humanity”?34
As attractive as high salary and comfortable lifestyle are to many, the life of a true professional is guided less by the desire to amass material goods than by a willingness to adhere to a code of ethical behavior and make the sometimes selfless decisions that protect the public and the corporation from misdeeds. In ideal form, that code of behavior is an expression of everything we have covered in this text regarding virtue, character, commitment, resilience, and the use of professional skills and training for the benefit of others. As first-century BCE Jewish religious leader Rabbi Hillel is said to have put it, “If I am not for myself, then who will be? And if I am only for myself, then what am I? And if not now, when?”
Today, it is often said that what counts at the end of a career is not how much money we made or how high up the corporate ladder we climbed. Rather, the real test is the difference we made—whether we have helped others or succumbed to motives such as greed and hubris (excess pride). Hubris creates the delusion that we are above the law and will never get caught. It has been used to justify many ruthless decisions whose sole criterion, in the end, is the potential for personal gain. This book has provided many examples on which to reflect about whether taking this short-term view actually benefits the company. In fact, hubris has ruined many lives and taken down a number of companies. Some, like Enron and Theranos, were once touted as icons of efficiency and ethical leadership.
Identifying Your Values and Mission
The values we choose to honor are the essence of ourselves, and we carry them with us wherever we live, work, and play. As we noted, the career you choose should reflect your values, whether you work at a for-profit or nonprofit organization, at Wells Fargo Bank or Doctors Without Borders (a medical rescue organization). It also is possible that you might work for a for-profit company and volunteer extensively on your own or on behalf of your firm in the nonprofit sector. Whatever path your career takes, it remains important not to let your well-considered values be diminished by others who do not prize loyalty or industriousness, for instance. Your career is not a contest in which the person who finishes with the biggest portfolio or fastest jet skis wins anything other than an empty prize. It is far better to treat others with integrity and respect and be surrounded by the true emblems of a successful career—family, friends, and colleagues who will attest to the dignity with which you have worked. In the final analysis, if you achieve a life of honor, then you have won.
How do you keep personal values like integrity, fairness, and respect close at hand? The best way is by writing them down, prioritizing them, and fashioning them into a personal mission statement. Most companies have mission statements, and people can have them, too. Yours will guide you on your path, clear away distractions on the road, and help you correct any missteps. It should be flexible, too, to account for changes in yourself and your goals. Your mission statement is not a global positioning system so much as a compass that guides you toward discovering who you are and what drives you (Figure 11.7).
Let us write your mission statement. Because it will reflect your values, start by identifying a handful of values that matter most to you. You can do this by answering the questions in Table 11.1; you may also find it beneficial to keep a journal and update your answers to these questions regularly.
Identifying Your Values
1. Of all the values that matter to you (e.g., honesty, integrity, loyalty, fairness, honor, hope), list the five most important.
2. Next, write down where you believe you learned each value (e.g., family, school, sports team, belief community, work).
3. Write a real or potential challenge you may face in living each value. Be as specific as possible.
4. Commit to an action in support of each value. Again, be specific.
Table11.1
Now you can incorporate these values into your mission statement, which can take the form of a narrative or action. There are many formats you can follow (see the Link to Learning box), but the basic idea is to unite your values with the goals you have set for your life and career. You can, for instance, link the benefit you want to create, the market or audience for which you want to create it, and the outcome you hope to achieve.35 Keep your statement brief. Richard Branson, founder of the Virgin Group, wants “to have fun in [my] journey through life and learn from [my] mistakes.” Denise Morrison, CEO of Campbell Soup, aims “to serve as a leader, live a balanced life, and apply ethical principles to make a significant difference.”36 Your own statement can be as simple as, for instance, “To listen to and inspire others,” or “To have a positive influence on everyone I meet.”
link to learning
Read this blog, “The Ultimate Guide to Writing Your Own Mission Statement,” by Andy Andrews for more information about creating a personal mission statement.
Watch the TEDx talk “How to Know Your Life Purpose in Five Minutes” about the self and identifying values to learn more.
Putting Your Values and Mission Statement to the Test
There may be no better place to put personal values and mission to the test than in an entrepreneurial role. Startups cannot be run on concepts alone. More than almost any other kind of venture, they demand practical solutions and efficient methods. Entrepreneurs usually begin by identifying a product or service that is hard to come by in a particular market or that might be abundantly available but is overpriced or unreliable. The overall guiding force that inspires the startup then is the execution of the company’s mission, which dictates much of the primary direction for the firm, including the identification of underserved customers, the geographic site for a headquarters, and the partners, suppliers, employees, and financing that help the company get off the ground and then expand. In a brand-new organization, though, where does that mission come from?
The founder or founders of a firm develop the company’s mission directly from their own personal beliefs, values, and experience; this is particularly true for nonprofits. Sometimes the inspiration is as simple as the recognition of an unmet need, such as the rising global demand for food. Bertha Jimenez, an immigrant from Ecuador who was studying engineering at New York University, could not help but be concerned that while craft breweries were riding a wave of popularity in her adopted city, they were also throwing away a lot of barley grain that still had nutritional value but that no one could figure out how to reuse. After a few attempts, Jimenez and two friends, also immigrants, finally hit on the idea of making flour out of this barley grain, and thus was born the Queens, New York–based startup Rise Products, whose website proclaims that “Upcycling is the future of food.”
Rise Products does not only supplies local bakers and pasta makers with its protein- and fiber-packed “super” barley flour for use in products from pizza dough to brownies. It has also sent product samples on request to Kellogg, Whole Foods, and Nestlé, as well as to a top chef in Italy. Jimenez and her fellow cofounders say, “In the long term, we can bring this to countries like ours. We want to look at technologies that won’t be prohibitive for other people to have.”37
If we were to diagram the relationship between founders’ values and the entrepreneurial mission, it would look something like this:
Just as a personal mission statement can change over time, so can the company mission be adapted to fit changing circumstances, industry developments, and client needs. TOMS Shoes is another entrepreneurial firm founded to fill a need: For every pair sold, the company donates a pair of shoes to a child without any. Over time, TOMS Shoes has expanded its mission to also offer eyeglasses and improved access to clean water to people in developing countries. It calls itself the “One for One” company, promoting founder Blake Mycoskie’s promise that “With every product you purchase, TOMS will help a person in need.”38
The point is, if you have clarified your personal values and mission statement, there is almost no limit to the number of ways you can apply them to your business goals and decisions to “do good and do well” in your career. The purpose of business is relationships, and the quality of relationships depends on our acceptance of self and concern for others. These are developed through the virtues of humility on the one hand and courage on the other. The demanding but essential task of life is to practice both. In that way—perhaps only in that way—can we be truly human and successful business professionals. | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/11%3A_Epilogue-_Why_Ethics_Still_Matter/11.05%3A_Making_a_Difference_in_the_Business_World.txt |
The Ethics of Aristotle: Virtue Theory
Aristotle, 384 BCE–322 BCE
Aristotle (384 BCE–322 BCE) was a student of Plato, who was himself a student of Socrates, one of the founders of Western philosophy. Aristotle spent about twenty years at Plato’s Academy in Athens, first as a student and then as an associate. Later he tutored the young Alexander of Macedonia, who would become Alexander the Great.1
Aristotle eventually returned to Athens where he opened his own school, the Lyceum, and where he studied and taught extensively in philosophy, government, and the natural and social sciences. He, along with most of the classical Greek thinkers, believed that all academic disciplines were linked. They were far less inclined than we are to rigidly separate academic subjects.
Aristotle’s principle work on ethics, The Nicomachean Ethics, was dedicated either to his father or son, both of whom were named Nicomachus, a popular name within his family. In Ethics, where Aristotle laid out the essence of virtue theory, he stated that if we truly desire people to be ethical, then we must have them practice ethics from an early age. Just as Plato claimed that unethical individuals are simply uneducated in ethics, so Aristotle held that constant practice is the best means by which to create ethical humans. He contended that men—for Aristotle, unlike Plato, education was restricted to males—who are taught to be ethical in minor matters as boys will automatically act ethically in all matters as they mature. Of course, a legitimate question regarding both philosophers is whether we believe they are correct on these points.
In Ethics, Aristotle introduced the concept of what is usually referred to as the golden mean of moderation. He believed that every virtue resides somewhere between the vices of defect and excess. That is, one can display either too little or too much of a good thing, or a virtue. The trick, as for Goldilocks, is to have just the right amount of it. Adding to the complexity of this, however, is the fact that striking the right balance between too much and too little does not necessarily put one midway between the two. The mean of moderation is more of a sliding value, fluctuating between defect and excess, but not automatically splitting the difference between them. Depending on the virtue in question, the mean may lie closer to a deficit or to a surplus. For example, take the virtue of courage (Figure A2). For Aristotle, the mean laid closer to foolhardiness or brashness. It’s not that foolhardiness is less a vice than cowardice; it’s just that courage verges closer to the one than to the other.
What constitutes a virtue in the first place, according to Aristotle? Besides courage, the virtues include wisdom, kindness, love, beauty, honesty, and justice. These approximate the same virtues proclaimed by Plato.
Aristotle also speaks of eudaemonia, a perfect balance of happiness and goodness interpreted classically. Humans experience eudaemonia both in themselves and in the world when they act virtuously and live a life of rational thought and contemplation. As Aristotle argued, rational thought is the activity of the divine, so it is appropriate for men to emulate this practice, as well.
The Ethics of Bentham and Mill: Utilitarianism
Jeremy Bentham, 1748–1832
John Stuart Mill, 1806–1873
Jeremy Bentham, an attorney, became what we would today call a consultant to the British Parliament in the late-eighteenth century. He was given the task of devising a method by which members could evaluate the worth of proposed legislation. He took a Latin term—util, or utility, usefulness, or happiness—and calculated the number of utils in proposed bills. Essentially this quantified the scoring of upcoming legislation—those pieces with the greatest number of utils were given a higher ranking than those with the least.
Utilitarianism as an ethical system today, though it has application to many areas beyond that simply of lawmaking, holds to this same principle. When making moral decisions, we are advised to select that action which produces the greatest amount of good for the greatest number of people. If the balance of good or happiness or usefulness outweighs that of evil, harm, or unhappiness, then the choice is a moral one. On the other hand, if the balance of evil outweighs that of good, then the choice is immoral. Due to this emphasis on the outcome of ethical decisions, utilitarianism is classified as a consequentialist theory.
Bentham lays much of his theory out in An Introduction to the Principles of Morals and Legislation (1789). There, he proposes the hedonic calculus—from the Greek hedone, or pleasure—as a mechanism by which one can determine the amount of pleasure versus pain in moral choices.
Bentham found a ready supporter and lieutenant in James Mill (1773–1836), a Scottish lawyer who came to assist Bentham in championing utilitarianism as a political philosophy. And when Mill’s son, John Stuart, was born, Bentham, having no children of his own, became his godfather. Together, Bentham and the elder Mill established a curriculum through which the younger Mill was schooled at home, an arrangement that was not uncommon in the early nineteenth century. John Stuart was evidently a prodigy and at an early age was taking on Greek, Latin, economic theory, and higher mathematics.
An odd twist accompanies the arrangements that Bentham made for his body after his death. Because donated cadavers were rare in teaching hospitals and this had led to a rash of grave-robbing, he stipulated that his body be dissected by surgeons for the education of their students, while in the presence of his friends. He further requested that, afterward, his body be re-stitched together, dressed in his own clothes, and perpetually displayed at what was then a new school that he had endowed, University College in London. To this day, Bentham’s corpse, with a wax head to replace the original, mummified one, is posed in a glass case at meetings of the trustees of University College, all by provision of his will.
John Stuart Mill, as he reached adulthood, became a leader of the second generation of utilitarians. He broke with his mentor, though, in one significant way: by distinguishing between different levels of pleasure—higher and lower ones—and offering a means by which to determine where any given pleasure falls. While Bentham insisted that ranking pleasures were subjective and that no one could truly say that some pleasures were objectively more worthy than others, the younger Mill claimed that we could indeed specifically determine which pleasures were the higher ones by polling educated people. Those pleasures which were ranked highest by this select cohort were indeed the greatest ones, and those which were ranked least were the inferior ones.
Mill also refined the political applications of utilitarianism and, in so doing, laid the foundation for the political movement of libertarianism. Though he himself never used this term and probably would take issue with being labeled a libertarian were he alive today, he did introduce many of the principles that are esteemed by libertarians. In his most important work on political freedoms, On Liberty (1859), he introduced the no-harm rule. By this, Mill proposed that no individual be deprived of his or her right to act in any fashion, even a self-destructive one, provided that his or her action does not impinge physically on others.2
For example, according to Mill, we may try to persuade an alcoholic to give up drinking. We may marshal our best arguments in an attempt to convince him or her that this is wrong and harmful—“remonstrate” is the verb that he employed. Still, if the alcoholic persists in drinking excessively despite our best efforts to encourage him or her otherwise, then no power of the state ought to be brought to bear to prevent him or her from drinking, unless and until the drinking causes physical harm to others. One can see the application of this to, say, motorcycle-helmet laws today. Mill would hold that even though the injury-preventing capacity of helmets clearly can be demonstrated, bikers still ought to be permitted to refrain from wearing them if they so choose.
The significance of utilitarianism in our era lies in the fact that many of us implement utilitarian thought processes when we have to make many ethical choices, even if we don’t necessarily consider ourselves to be utilitarians. In addition, utilitarianism continues to influence new generations of philosophers and ethical thinkers, such as the Australian Peter Singer, an inspiration for the contemporary animal rights movement who is currently on the faculty at Princeton University.
A telling critique of utilitarianism, however, is the objection that it assays no good or evil in acts themselves, but only in the good or evil that these acts produce. If a proposed municipal, state, or federal law could be demonstrated to serve the defined interests of a majority at the expense of the interests only of a minority, then utilitarianism would suggest that such a law is good and moral. Little recognition appears within utilitarianism of the possibility of tyranny of the majority. Many critics of utilitarianism have scored this weakness of the ethical system. A persuasive instance of this is the short story “Those Who Walk Away from Omelas” by the American writer Ursula K. Le Guin (1929–2018).
The Ethics of Kant: Deontology
Immanuel Kant, 1724–1804
The sage of Königsberg in Prussia (now Kaliningrad in Russia), Kant taught philosophy at the University of Königsberg for several years. In fact, throughout a very long lifetime, especially by the standards of the eighteenth century, he never traveled far from the city where he had been born.
Kant’s parents were members of a strict sect of Lutheranism called pietism, and he remained a practicing Christian throughout his life. Though he only occasionally noted religion in his writing, his advocacy of deontology cannot be understood apart from an appreciation of his religious faith. Religion and ethics went hand in hand for Kant, and God always remained the ground or matrix upon which his concept of morality was raised.
Though he never married, Kant was by contemporary accounts no dour loner. He apparently was highly popular among his colleagues and students and often spent evenings eating and drinking in their company. He frequently hosted gatherings at his own lodging and served as a faculty master at the university. He was also a creature of habit, taking such regular walks through the neighborhood surrounding campus that residents could tell the time of day by the moment when he would pass their doorway or window.
The term deontology stems from the Greek deon—duty, obligation, or command. As an ethical system, it is the radical opposite of utilitarianism in that it holds that the consequences of a moral decision are of no matter whatsoever. What is important are the motives as to why one has acted in the way that one has. So an action may have beneficial results, but still be unethical if it has been performed for the wrong reasons. Similarly, an action may have catastrophic consequences, but still be deemed moral if it has been done on the basis of the right will.
Not only is deontology non-consequentialist, it is also non-situationalist. That is, an act is either right or wrong always and everywhere. The context surrounding it is unimportant. The best example of this is Kant’s famous allusion to an axe-murderer who, in seeking his victim, must always be told the truth as to his would-be victim’s whereabouts. By Kant’s reasoning, one cannot lie even in this dire circumstance in order to save the life of an innocent person. Kant was not diminishing the significance of human life in holding that the truth must always be told. Instead, he was insisting that truth-telling is one of the inviolable principles that frames our lives. To lie—even in defense of life—is to cheapen and weaken an essential pillar that sustains us. Kant knew that this example would draw critics, but he deliberately chose it anyway in order to demonstrate his conviction about the rightness of certain acts.
Perhaps the most well-known element of Kant’s ethics is his explanation of the categorical imperative, laid out in his Fundamental Principles of the Metaphysics of Ethics, 1785. This intimidating phrase is just a fancy way of saying that some actions must always be taken and certain standards always upheld, such as truth-telling. The categorical imperative has two expressions, each of which Kant regarded as stating the same thing. In its first expression, the categorical imperative holds that a moral agent (i.e., a human being imbued with reason and a God-given soul) is free to act only in ways that he or she would permit any other moral agent to act. That is, none of us is able to claim that we are special and so entitled to privileges to which others are not also entitled. And in its second expression, the categorical imperative stipulates that we must treat others as ends in themselves and not just as means to our own ends. So we can never simply use people as stepping stones to our own goals and objectives unless we are also willing to be so treated by them.
Despite the enduring popularity of utilitarianism as an ethical system, deontology is probably even more pronounced within our moral sensitivity. Perhaps the best indicator of this is that most of us believe that a person’s motives for acting ought to be taken into account when judging whether those actions are ethical or unethical. To witness a famous literary example of this, Victor Hugo made clear in Les Misérables that his protagonist, Jean Valjean, became a hunted man simply because he stole bread to feed his starving family. By Hugo’s standards—and our own—Valjean truly committed no crime, and the tragedy of his life is that he must spend a significant part of it on the run from the dogged Inspector Javert.
Deontology, like all ethical systems, has its critics, and they zero in on its inflexibility regarding acts which may never be permitted, such as telling a lie, even if it is to save a life. Still, the system continues to inspire a devoted following of philosophers to this day. In the twentieth century, this was notably represented by the British ethicist W. D. Ross (1877–1971) and the American political philosopher John Rawls (1921–2002). Those who embrace deontology are typically attracted to its deep-seated sense of honor and commitment to objective values in addition to its insistence that all humans be treated with dignity and respect.
The Ethics of John Rawls: Justice Theory
John Rawls, 1921–2002
Though Rawls considered himself to be a utilitarian, he also acknowledged that his moral philosophy owed much to the social contract tradition represented over the past few centuries by John Locke and David Hume, among others. To complicate Rawls’ philosophy even further, there was a bit of deontology exhibited in it, too, through Rawls’ sentiment was that political freedoms and material possessions be distributed as fully and widely as possible precisely because it is the right thing to do.
Rawls is a uniquely American political philosopher, and this can be seen from his emphasis on political liberty. But this statement also speaks to his commitment to the utilitarianism of John Stuart Mill, the second-generation leader of that movement. Hence Rawls’s assertion that he actually was a utilitarian at heart.
Whatever the influences on his thought, Rawls was the most significant political philosopher ever to emerge from the United States, and probably one of the most influential ethicists in the West over the past several centuries. He labeled his ethics to be “justice as fairness,” and he developed it over nearly a lifetime. It was laid out formally in 1971 with the publication of his A Theory of Justice, a treatise of more than 550 pages. Still, preliminary drafts of what became this book were circulating within philosophical circles beginning in the late 1950s.
To be fair, Rawls insisted, human justice must be centered on a firm foundation comprising a first and second principle. The first principle declared that “each person is to have an equal right to the most extensive basic liberty compatible with a similar liberty for others.” These liberties included traditional ones such as freedom of thought and speech, the vote, a fair trial when accused of a crime, and the ownership of some personal property not subject to the state’s seizure. Very few commentators have criticized this principle.
It is the second principle, however, which has incurred the loudest objections. It consisted of two sub-points: first, socio-economic inequality is permissible only to the degree that it brings the greatest benefit to the least-advantaged members of society. (Rawls labeled this the difference principle.) And, second, authority and offices are to be available to everyone competent to hold them. (Rawls called this fair equality of opportunity.) Additionally, the training to ensure that all may merit these offices absolutely must be available to all.
What Rawls actually advocated was an at-least minimal distribution of material goods and services to everyone, regardless of what inheritance he or she might come by or what work he or she might engage in. And this tenet has incurred a firestorm of controversy. Many have embraced what they term Rawls’ egalitarian perspective on the ownership of property. Yet others have argued that he ignored the unlimited right to ownership of personal property specifically predicated on hard work and/or bequests from family. On the other hand, pure Marxists have dismissed this principle as not going far enough to ensure that sizable estates, as well as the means of production, be extracted from the clutches of plutocrats.
How might society move toward justice as fairness? Rawls proposed a thought exercise: If we all could imagine ourselves, before birth, to be in what he calls the Original Position, knowing only that we would be born but without knowledge of what sex, race, wealth, ethnicity, intelligence, health, or family structures we would be assigned, then we necessarily would ensure that these two principles would be observed. We would do so because we would have absolutely no way of predicting the real-life circumstances which we would inherit post-birth and wouldn’t want to risk being born into an impoverished or tyrannical environment.
The reason why we would be blind as to the world that each of us would inhabit would be because we would be cloaked by a “veil of ignorance” that would screen us from pre-knowledge of our circumstances once we were born—in other words, viewed from the original position, we wouldn’t take the chance of suffering from political oppression or material poverty. Self-interest, then, would motivate us to insist that these minimum levels of political and material largesse would be the birthright of all.
Of course, we can’t return to our pre-birth stage and so negotiate this sort of arrangement beforehand. Hence, the only way of creating this sort of world now would be to imagine that we were in the original position and deliberately build such a fair environment for all.
Given human nature and its inherent selfishness, is it reasonable to expect human beings to make a concerted effort to create the structures needed for justice as fairness? Perhaps not, but realize that Rawls was only following in the footsteps of Plato in his proposal to craft a perfect polis, or city-state, in The Republic. Therein Plato took all of the beauty and wisdom of the Athens of his day and imagined it without any of its limitations. Plato knew that this was an ideal, but he also realized that even an attempt to build such a city-state would produce what he regarded as much incalculable good.
Footnotes
• 1 Aristotle’s family originated from a region in northern Greece that was adjacent to classical Macedonia, and his father, Nicomachus, had similarly tutored Alexander’s father, Philip II of Macedonia.
• 2 A limitation within Mill’s no-harm principle was its focus solely on physical harm without acknowledgement of the reality of psychological damage. He made no allowance for what the law today denotes as pain and suffering. In his defense, this concept is a twentieth-century one and has little credibility among Mill’s contemporaries. | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/12%3A_Appendices/12.01%3A_The_Lives_of_Ethical_Philosophers.txt |
Dan Bane, chairman and chief executive officer of Trader Joe’s
With roots in Pasadena, California, the Trader Joe’s brand is no stranger to ethical and sustainable business practices. At its origin, when it was a mere convenience store and still called Pronto Markets, founder Joe Coulombe opted to pay his employees at the median California family income rate. He did not want to exploit his employees the way he felt other large convenience chains did at the time.1 After reading about the looming threats to the environment in 1970, Joe transformed his stores to become more health and environmentally conscious. Indeed, as far back as 1977, the growing chain of grocery stores began selling reusable “Save-A-Tree” canvas bags to its customers to encourage more environmentally friendly shopping practices.2
These ethical principles, like the plastic lobsters it decorates its stores with and the Hawaiian shirts its employees wear, have become an integral and recognizable part of the Trader Joe’s brand. With more than four hundred stores nationwide, this chain of grocery stores specializing in reasonably priced, high-end cheeses, wines, and organic foods is a beacon of ethical business practices in the grocery industry.
Joe Coulombe, the original Trader Joe, has long since given up his Hawaiian shirts and his role as leader of the company. Since 2001, Trader Joe’s chief executive officer (CEO) has been Dan Bane. Bane has held firm on the ethical values established decades before. As part of his leadership approach, he often works in his stores so he can interact with customers and employees. He imagines the organizational principle at work at Trader Joe’s as an inverted pyramid, where he as CEO sits at the bottom of the pyramid and the many employees and customers are at the top. He thinks of himself more like a conductor of an orchestra than a dictator shouting orders at his underlings.3
Bane’s Trader Joe’s has seven core values: demonstrating integrity, being product-driven, producing customer “wow” experiences, challenging bureaucracy, seeking continuous improvement, treating the store as the brand, and being a national and neighborhood company.4 These core values are a roadmap for Bane and the company. As he sees it, it is his job to “make sure we stay on those [values] and preach those all the time.”5
As an extension of its values, Trader Joe’s tries to keep a close watch on its supply chain. In 2010, it was taken to task by environmental groups for selling seafood that had been harvested in environmentally unfriendly ways. Bane took this criticism to heart and pledged to do better. The company now sends its purchasers out to the very locations where they produce the product they sell. Bane wants to be certain that the suppliers are using practices that are consistent with Trader Joe’s focus on environmental sustainability and even labor practices.6 As an added precaution, he also works with Greenpeace to keep the store shelves as green-friendly as possible.7
• Watch this video of Dan Bane discussing his position on ethics as CEO of Trader Joe’s to learn more.
Mary T. Barra, chairman and CEO of General Motors
Mary T. Barra was born into a General Motors (GM) family in Michigan. Her father worked for the GM brand Pontiac for nearly four decades and one of her first jobs was working at a GM plant herself checking the fender panels and hoods of cars rolling off the line when she was only eighteen years old.
After earning a degree in electrical engineering from the General Motors Institute (now called Kettering University) in Flint, Michigan, she returned to the company to work as an engineer for Pontiac’s new sporty two-seater, the Fiero. After a few years working as an engineer, GM then sent her to Stanford University on a fellowship to earn a master of business administration. From there, she climbed the executive ladder, working in a variety of positions until, in 2014, she was named CEO of General Motors Company, becoming the first woman ever to hold that position at a major international automaker.8
When Barra took the reins of the company, the once-dominant automobile manufacturer had undergone a considerable decline in influence and prestige. The Great Recession hit the already struggling company very hard. As a result, it was compelled to seek bankruptcy and government support. It also went through some painful downsizing, even going so far as to discontinue the very Pontiac division Barra once worked for as a young engineer.
Just a few years later, GM appears to have turned those lemons into lemonade. It is now a healthy company with billions in cash on its books and billions in earnings. How it got to this healthy position is due in large part to Barra’s efforts to transform GM’s famously large and clumsy bureaucracy, as well as her push to encourage diversity of thought, innovative ways of dealing with problems, and working more closely with GM’s many stakeholders.9
But, this success aside, there were huge ethical bumps in the road that appeared right at the time Barra took control. In the spring of 2014, a string of news stories emerged regarding possible defects in the Chevy Cobalt, a GM compact car that started coming off the line in 2004. These stories eventually uncovered the fact that GM insiders had known of the defect and covered it up for a decade, even when they knew the defect was causing needless injuries and deaths.
The press attention was a mounting disaster for GM, and Barra’s action was crucial. As the country condemned GM, Barra announced that “whatever mistakes were made in the past, we will not shirk from our responsibilities now and in the future. Today’s GM will do the right thing.”10 Barra jettisoned the “cost culture” that had precipitated the defect and cover-up, and replaced it with a “customer culture.” She also reformulated GM’s code of ethics and published a booklet on the code called Winning with Integrity. Although some have pointed to some weaknesses in the code, it remains an important step for GM in encouraging personal integrity and empowering GM employees to speak up.11 These days, GM and Barra hope the tragic lapse in ethics the company is now safely in the rearview mirror.
• Watch this video of Mary Barra discussing GM’s response to the ignition switch recall to learn more.
Marc Benioff, chairman, CEO, and founder of Salesforce
Marc Benioff took to computer entrepreneurism at an early age. At only 15 years old, he had already started his own software company. The profits from that company were enough to put him through college. When he graduated, he jumped right into a position at the software company Oracle, quickly climbing the corporate ladder and becoming the youngest vice president in the company’s history within a few years.12
Benioff eventually left Oracle to start his own software company, Salesforce. At its inception, Salesforce was a revolutionary approach to software, in that it delivers centrally hosted applications over the Internet to its clients. The bold move of charting a cloud approach to computing proved successful and, as of 2017, Salesforce was pulling in \$8.39 billion in revenue.
Rather than take his success for granted, however, Benioff has tried to use his wealth and position of power to support ethical causes, such as promoting sustainable growth and diversity. He is a big supporter of stakeholder capitalism as well.13 This is an approach to business that attempts to consider the interests of all major stakeholders rather than catering merely or disproportionately to the investors.
And Benioff has tried to put his money where his mouth is. Since 1999, he has maintained what he calls his “1-1-1 model.” This is a company program that donates 1% of equity, 1% of employee time, and 1% of products to nonprofit organizations operating in locations where his companies do business. According to Benioff, this is just one way for him to demonstrate that “the business of business is improving the state of the world.”14 Another way is by ensuring that there is pay equity between men and women working in the same positions in his company. When Benioff realized a few years ago that men and women were not being paid at a comparable rate, he took action to change this.15
Beyond philanthropy and striving for equity in his company, Benioff recognizes that technology innovators like himself need to take initiative in ensuring that business is done ethically. He knows that the volume of innovation coming out of the industry makes it difficult to manage, and he does not trust individual CEOs and companies to always do the ethical thing. “We’re moving rapidly into a new world where we know the government is going to have to be involved in these next-generation technologies—like AI [artificial intelligence], biotech, etc.—which are all so new, and could have unintended consequences,” he said in 2018. To manage the disruption that comes with these changes, he suggested it might be necessary to create a regulatory government body not unlike the Food and Drug Administration, except for technology.16
Recently, his ethical approach to business has led him to speak out on the autocratic style of many other leaders in Silicon Valley. Speaking in Davos, Switzerland, in 2018, Benioff challenged leaders in technology to step back from the all-too-common position he summarized as, “I’m the entrepreneur and I am in charge no matter what happens.” Citing the infamous aggressive leadership style of Uber’s founder and former CEO, Travis Kalanick, he warned against adopting this approach. Instead, he proposed they embrace the concept of trust.17 “It’s a culture issue. What is the most important thing in your company—is it trust or is it growth? If anything trumps trust, we are in trouble.”18
• Watch this video of Marc Benioff discussing the crisis of trust in Silicon Valley to learn more.
John C. (Jack) Bogle, founder of The Vanguard Group
Born months before the infamous Black Thursday stock market crash of 1929, Jack Bogle knows from experience the social and economic cost of unethical and unregulated stock market speculation. In the depression that followed the crash, his family lost much of its wealth, and his father sunk into a destructive alcoholism that tore the family apart. He and his twin brother were compelled to enter the workforce at early ages, holding menial jobs like delivering papers and waiting on tables.19 The experience was formative for Bogle, who admits he feels sorry for those who do not grow up in circumstances where they have to work for what they need. Despite earning a comfortable fortune in managing mutual funds, Bogle remains reluctant to spend money on himself, believing that extravagance is a weakness that exposes him to unnecessary risk.20
After graduating with a degree in economics from Princeton University in 1951, Bogle went directly into the banking and investment industries. He quickly demonstrated an aptitude for making wise investments and rose up the ranks at Wellington Fund, eventually becoming the chairman in 1970. In 1975, he founded The Vanguard Group, an investment firm based on the principle that fund shareholders own the funds and, therefore, own Vanguard. There are no outside owners seeking profits at Vanguard.21
This simple but revolutionary founding ethical standard has earned Bogle accolades from thought leaders around the world. Economist and former vice chair of the Federal Reserve, Alan S. Blinder, for example, has celebrated Bogle’s “relentless voice, sharp pen, and indefatigable energy . . . prodding the mutual fund industry in particular, and the financial industry more generally, to embrace higher business, fiduciary, and ethical standards.”22
Beyond establishing his client-centered approach to money management, Bogle has become an important voice advocating for ethical business practices. Too often, Bogle complains, CEOs in the investment business are compelled to make bets in the expectations market rather than to do what they are supposed to and build real corporate value. The result of this type of thinking and practice has been to distort the financial system. Instead, Bogle proposes following simple ethical guidelines such as seeking higher profits for investors rather than managers, treating the client as an owner rather than a customer, and limiting risk. These guidelines have worked for him and have made a lot of money for his clients. It turns out, he contends, that “good ethics is good business.”23
• Watch this video of John Bogle discussing the importance of ethics in leadership to learn more.
Yvon Chouinard, founder, and Rose Marcario, CEO and president of Patagonia Works
Yvon Chouinard was introduced to rock climbing almost by accident. After taking an interest in falconry, an adult decided to teach the young Chouinard to rappel down a cliff to reach the cliff-side falcon nests. But it was not long before Chouinard was teaching himself how to climb up in the same way. Thus began a life-long love affair with climbing around the world. To support his climbing lifestyle, he learned to make and sell steel climbing pitons, the small metal spikes with an eyelet that climbers drive into the rock to guide their rope.
The piton business proved successful and eventually became Chouinard Equipment, the largest supplier of climbing hardware in the United States. But with this success, Chouinard was suddenly faced with his first ethical dilemma. As climbing became more popular, more pitons were driven into the rock, sometimes causing great damage. This was something Chouinard’s internal sense of environmentalism could not tolerate, so he made the ethical move to phase out the pitons and sell more environmentally friendly aluminum chocks instead. Around this same time, Chouinard began experimenting in the active sportswear business. Soon the clothing line outpaced the gear line. The Patagonia clothing line was born.
Despite Chouinard’s growing success, his interest in environmentalism never flagged. Indeed, if anything, it increased. The 1970s, 1980s, and 1990s were decades of increasing public awareness about the dangers of environmental neglect and the growing threat of climate change. It was at this time that terms like “acid rain,” “the ozone layer,” “global warming,” and “deforestation” became common rallying cries for environmentalists around the world. Chouinard wanted to make Patagonia part of the movement for change. Beginning in 1986, Patagonia committed to donating 10% of its annual profits to environmental nongovernmental organizations (NGOs). Two years later, Patagonia led its own effort to save Yosemite Valley from overdevelopment.
This concern with environmentalism has continued with the coming on board of Rose Marcario as CEO in 2012. She shares Chouinard’s goal of applying more ethical and environmentally friendly protection methods. Using solar energy and radiant heating in their plants and retail stores, Patagonia has been able to reduce its carbon footprint. It also strives to use recycled content in its clothing and to exclude dyes that require toxic ingredients. Patagonia also switched to using only organic cotton for its cotton products to reduce its reliance on chemical pesticides. Recently, Marcario has taken up environmental activism. Alongside Chouinard, Marcario decided to protest attempts to rescind the national monument designation of Bears Ears in southeastern Utah, first by withdrawing Patagonia from the annual Outdoor Retailer trade show in Salt Lake City in February 2017, and then by suing the Trump administration for its decision to reduce the monument’s size.24 Like Chouinard, Marcario believes strongly in maintaining public lands free of private development. Many decades after it was founded as an outdoor clothing line, Patagonia’s policies remain consistent with the environmental ethics of its founder.
• Watch this video of Yvon Chouinard discussing his position on environmentalism in business to learn more.
Tony Hsieh, CEO of Zappos
Born to Taiwanese immigrants in Illinois and raised largely in San Francisco’s Bay Area, Tony Hsieh excelled at school as a child. He developed an interest in computers, which helped get him accepted to Harvard University, from which he graduated in 1995 with a degree in computer science. Upon graduation, he jumped right into the corporate world by taking a position at Oracle, a large database and software company.
At the time, Hsieh felt he had made it. His hard work had paid off and he was now perched firmly on the ladder to corporate and business success. Five months later, however, Hsieh abruptly quit. “I did not want to carry on with my job just because it paid me a handsome salary. The job lacked creativity and the corporate environment wasn’t my style.”25
Within a few months, Hsieh and another former Oracle employee, Sanjay Madan, launched their own business from the stuffy confines of their apartment. The company was called LinkExchange, an innovative advertising cooperative that used the power of the emerging Internet to amplify advertising. The company proved to be a huge success. Within two years, it had acquired nearly half a million members and displayed ten million advertisements per day. Microsoft bought it in 1998 for \$265 million.
After his success with LinkExchange, Hsieh was encouraged to become CEO of the newly created Zappos.com, an Internet shoe retailer. As CEO, Hsieh has embraced ethical behavior through what has been termed “radical transparency,” where he openly shares his schedule and even his personal and company priorities. Hsieh believes strongly that this transparency helps build trust with his employees and other stakeholders.26
Beyond transparency, Hsieh’s ethical approach has created a strong office culture that encourages team unity, camaraderie, and employee empowerment. The organizational atmosphere at Zappos rejects hierarchy and management, and encourages creativity, even wackiness. And Zappos has extended this ethical approach to community involvement as well. Hsieh dumped his heart, soul, and \$350 million of his own money into an urban revitalization project of the small part of Las Vegas surrounding the company. He has transformed it into vibrant and hip neighborhood of vinyl record shops, independent bookstores, trendy restaurants, and free live music. The company and its surrounding neighborhood are now almost seamless. As a result, periods of work and periods of play in the company also intermingle.27 In this way, the company is now a manifestation of Hsieh’s bold rejection of the stiff corporate culture he rejected at Oracle. And it may very well transform corporate culture entirely.
• Watch this video of Tony Hsieh discussing the problem with some corporate culture to learn more.
Kim Jordan, CEO of New Belgium Brewing Company
In 1988, while working in Europe as an electrical engineer, Jeff Lebesch took a beer-tasting trip through Belgium riding atop a fat-tire bicycle. A couple years later he met Kim Jordan and they soon married. Both being beer aficionados, they could smell a great business opportunity bubbling up from Jeff’s experience. Sensing that the famously bold flavors of Belgian beer were exactly what the American beer market lacked and needed, Jeff and Kim got to work testing methods and recipes in their Fort Collins, Colorado, basement. By 1991, New Belgium Brewing was born.28
The brewery emerged at just the right time: Young Americans were just beginning to expand their general appreciation for craft brews. Over the next nine years, the company grew steadily. Then, in 2000, Jordan decided to grow the company in a new and radically different way. Inspired by her Quaker background, she started New Belgium’s employee stock ownership program (ESOP). She had to battle the many advisers and accountants that came out against the move, but Jordan thought it was an important ethical move to give the employees a stake in the business.29
By 2012, Jordan had sold her last piece of ownership in the company to the ESOP. She knows that had she held onto this piece, she would have made even more money. But it was not necessarily money she was after. She wanted her employees to feel they were a part of the company and had a say in its operations. She felt this was the ethical and neighborly thing to do. According to Jordan, “We spend a lot of time at this thing called work, and if it can’t feel warm and like everyone you see every day has your back, then I think that’s a real tragedy.” To Jordan’s great credit, the ESOP has proven to be a great business success. In 2015, the company became the fourth largest craft brewer, selling nearly a million barrels in that year and pulling in \$225 million in sales.30
And Jordan’s ethical principles have been a driving force in the business even beyond transforming her employees into joint owners. New Belgium is particularly interested in demonstrating that it is environmentally safe and sustainable. For example, in 1998, it became the first U.S. brewer to power its entire operation with wind-produced electricity. In 2002, it completed a biological wastewater facility that would clean the water left over by the brewing process before releasing it back into the environment. It also uses natural draft cooling and swamp-cooling systems rather than the less environmentally friendly glycol-cooled systems for its cold storage.31
Nor is Jordan content with only her environmental achievements. New Belgium Brewing is also a leader in philanthropy. It donates \$1 to charities in its distribution territory for every barrel of beer it sells. Over the years, this has translated into millions of dollars in donations, and in 2018, the company projects that it will donate more than \$900,000 to projects across the country.32 It also manages a volunteer corps it calls the Beer Scouts, which finds and helps supply volunteers for causes aligned with New Belgium’s values.33 Finally, it collaborates with a number of organizations supporting business ethics and nature conservation, such as Conservation Colorado, the Natural Resources Defense Council, and the American Sustainable Business Council.34
• Watch this video of Kim Jordan discussing New Belgium’s position on sustainability to learn more.
Indra Nooyi, chairman and CEO of PepsiCo
What might a company like PepsiCo, known for selling sugar-filled sodas and junk food, teach us about ethical business practices? It might actually teach us quite a lot if CEO Indra Nooyi has anything to say about it.
Born in India and having immigrated to the United States at a relatively young age, Nooyi excelled at school and moved right into the business world after graduating from Yale University. In 1994, Nooyi came to PepsiCo as senior vice president for strategic planning. In 2006, she was promoted to president and CEO, and assumed the role of chairman in 2007. In August 2018, Nooyi announced she would be stepping down as CEO in October 2018 and leaving the position of chairman in early 2019. As CEO, she has tried to push PepsiCo in new and more ethical directions.
Nooyi devised a sustainable-growth agenda for the company based on three pillars. The first pillar has to do with health and well-being. Through acquisitions, mergers, and other internal changes, Nooyi has tried to transform the Pepsi brand into more of an agent for change and healthy living. She does not want the company to be known merely as the junk food and sugary soda company. She believes in providing options to consumers and in making sure that PepsiCo’s traditional products are not unnecessarily unhealthy.
The second pillar is a focus on the environment. Nooyi has driven PepsiCo to take notice of its reliance on exhaustible resources like water and she has led efforts to encourage greater energy conservation and recycling efforts. These are issues that are very personal to Nooyi, who grew up in a water-distressed city in India. She wants to use PepsiCo’s great resources not only to find ways to produce beverages that conserve water better but also to pass on this technology to local farmers so they can contribute to this process.
The third pillar is about empowering people who typically lack power. She has promoted outreach to women and minorities so they feel comfortable and supported in the company. To do this, she has created daycare centers in the bottling plants, added maternity and paternity leave as company benefits, and even made religious accommodations. As she sees it, she wants to make PepsiCo a place “where every employee can bring their whole self to work and not just make a living but also have a life.”
Nooyi is a champion of what she calls “Performance with Purpose.” By this she means recognizing that a company’s performance in the marketplace is intimately connected to seeking ethical and sustainable approaches. Being a steward of the environment and encouraging tolerance and inclusion are not secondary functions for Nooyi; they are inherent in the company’s approach to business. “If we don’t focus on the environment, our cost will be too high. . . . and if we don’t have the best and brightest people, we won’t be able to deliver performance.”
Performance with purpose is different from mere corporate social responsibility. As she explains, “Corporate social responsibility is about spending the money you make. You make money and then you give it to a couple of charitable causes in some distant lands and feel good. This is not a feel-good program. This is who we are. You talk about ethics. The ethics of our company is performative purpose. The ethics of our company is the deep-seated belief that large companies can actually make a difference to societies in which we operate.”
• Watch this video of Indra Nooyi delivering the keynote address at the World’s Most Ethical Companies Gala in 2018 to learn more.
Jostein Solheim, CEO of Ben & Jerry’s
Cherry Garcia, Wavy Gravy, and Chubby Hubby are just a few of the wacky flavors churned out by the four-decades-old ice cream company, Ben & Jerry’s. These quirky names are a reflection of the company’s unique business style, something Jostein Solheimsigned on to when he agreed to become CEO of the company in 2010.
Ice cream was nothing new to Solheim. Before becoming CEO, he had worked for Unilever’s many ice cream brands like Breyers, Klondike, Popsicle, and Good Humor. Indeed, the Norway native calls himself “an ice cream guy.” And he is wildly enthusiastic about maintaining Ben & Jerry’s iconic weirdness, even celebrating Unilever’s acquisition of the company by eating a full pint of Chunky Monkey.35
But as Solheim knows, Ben & Jerry’s is more than just an ice cream chain; it is also an organization dedicated to making a social impact. The founders of the Vermont-based company, Jerry Greenfield and Ben Cohen, transformed their ice cream–making success into a values-led social mission by supporting a host of ethical positions on such issues as responsible manufacturing, fair trade, and non–genetically modified organisms labeling.36 And Solheim has embraced this important component too. He has led the company to establish public positions on racial justice in the United States, environmental activism, and even private prisons. “What inspires me,” Solheim said, “is what social impact can we create with this business.”37
The activism Solheim supports through Ben & Jerry’s springs from his understanding of the stakeholders in his company. For example, he refers to the consumers as “fans.” “They’re more than just customers,” he explains. “They are bigger stakeholders in our company and we have a responsibility to them beyond a basic transactional exchange of product.” And the same goes for the suppliers, farmers, and NGO partners. “They all connect in a model we called ‘linked prosperity,’ which is circular and reinforcing.”38
It is Solheim’s vision to see Ben & Jerry’s as a leader in ethical change. Making a values-led company that embraces the concept of linked prosperity also highly profitable is major step in transforming the standard business model. He believes it is inevitable that other businesses will catch on and recognize they, too, have ethical obligations to uphold community values and recognize how their work affects the larger global community.39
• Watch this video of Jostein Solheim discussing his interpretation of conscious capitalism to learn more.
Footnotes
• 1 Beth Kowitt, “Meet the Original Joe,” Fortune, August 23, 2010, http://fortune.com/2010/08/23/meet-the-original-joe/.
• 2 “Our Story: Timeline,” Trader Joe’s, https://www.traderjoes.com/our-story/timeline (accessed July 6, 2018).
• 3 “The Gathering (Oct. 2013) with Dan Bane,” Claremont Lincoln University, https://www.youtube.com/watch?v=CxUjovZDMbc (accessed July 6, 2018).
• 4 Anthony Molaro, “The Trader Joe’s Way for Libraries (a Manifesto Part III),” November 27, 2013, informationactivist.com/2013...esto-part-iii/
• 5 “The Gathering (Oct. 2013) with Dan Bane,” Claremont Lincoln University, https://www.youtube.com/watch?v=CxUjovZDMbc (accessed July 6, 2018).
• 6 “The Gathering (Oct. 2013) with Dan Bane,” Claremont Lincoln University, https://www.youtube.com/watch?v=CxUjovZDMbc (accessed July 6, 2018).
• 7 Jim Lichtman, “2016 – Over Already?,” It’s Ethics, Stupid!, December 31, 2016, ethicsstupid.com/accountabil...-over-already/ (accessed July 6, 2018).
• 8 Max Nisen, “How Mary Barra Went from Inspecting Fender Panels to GM’s First Female CEO,” Business Insider, December 10, 2013, www.businessinsider.com/mary-...er-bio-2013-12.
• 9 Rick Tetzeli, “Mary Barra Is Remaking GM’s Culture—and the Company Itself,” Fast Company, October 17, 2016, https://www.fastcompany.com/3064064/...company-itself.
• 10 Phil LeBeau and Jeff Pohlman, “The Corporate Culture: Behind the Scenes at General Motors,” CNBC, May 16, 2014, www.cnbc.com/2014/05/16/the-...al-motors.html.
• 11 Marianne Jennings and Lawrence Trautman, “Ethical Culture and Legal Liability: The GM Switch Crisis and Lessons in Governance,” www.bu.edu/jostl/files/2016/...MACROD-PDF.pdf (accessed July 6, 2018).
• 12 Matt Weinberger, “The Rise of Marc Benioff, the Flashy Billionaire Founder of Salesforce,” Business Insider, March 17, 2016. www.businessinsider.com/the-r...benioff-2016-3.
• 13 Rana Foroohar, “Marc Benioff: Taking on Silicon Valley’s Noxious Culture,” Financial Times, January 21, 2018, https://www.ft.com/content/117c23d2-...2-d7d59aace167.
• 14 “Pledge 1%,” Salesforce.org, http://www.salesforce.org/pledge-1/ (accessed July 3, 2018).
• 15 Lesley Stahl, “Leading by Example to Close the Gender Pay Gap,” 60 Minutes, April 15, 2018, https://www.cbsnews.com/news/salesfo...ender-pay-gap/.
• 16 Rana Foroohar, “Marc Benioff: Taking on Silicon Valley’s Noxious Culture,” Financial Times, January 21, 2018, https://www.ft.com/content/117c23d2-...2-d7d59aace167.
• 17 David Reid and Andrew Ross Sorkin, “Marc Benioff Launches Tirade against the Leadership Style of Silicon Valley,” CNBC, January 23, 2018, https://www.cnbc.com/2018/01/23/davo...on-valley.html.
• 18 “Marc Benioff: Trust Has to Be the Highest Value in Your Company,” Salesforce.com, www.salesforce.com/company/n...s/2018/012318/ (accessed July 3, 2018).
• 19 Jonathan Berr, “Vanguard Founder John Bogle Sees No Good Alternatives to Indexing,” Aol.com, February 13, 2010, https://www.aol.com/2010/02/13/vangu...es-to-indexin/ (accessed July 5, 2018).
• 20 Chris Taylor, “Me and My Money: Jack Bogle,” Reuters, September 11, 2012, https://www.reuters.com/article/us-c...88A0LI20120911.
• 21 “A Remarkable History: Our Heritage,” Vanguard, https://about.vanguard.com/who-we-ar...kable-history/ (accessed July 5, 2018).
• 22 Taylor Larimore, “What Experts Say about Jack Bogle,” Bogleheads.org, April 17, 2015, https://www.bogleheads.org/forum/vie...c.php?t=163903.
• 23 John C. Bogle, “Ethical Principles and Ethical Principals,” a speech delivered at The Johnson School at Cornell University, November 11, 2010, http://johncbogle.com/wordpress/wp-c...l-11-11-10.pdf (accessed July 5, 2018).
• 24 David Gelles, “Patagonia v. Trump,” New York Times, May 5, 2018, https://www.nytimes.com/2018/05/05/b...ears-ears.html.
• 25 Udhaw Kumar, “Serial Entrepreneur Tony Hsieh: Quitting My Dream Job at Oracle Was the Best Decision,” BrainPrick, June 21, 2012, http://brainprick.com/serial-entrepr...best-decision/.
• 26 David Henderson, “Tony Hsieh, a Leader Grounded in Ethics and Collaboration,” davidhenderson.com, www.davidhenderson.com/2014/...collaboration/ (accessed June 28, /2018); David Rodic, “What I Learned from Studying Zappos CEO Tony Hsieh’s Schedule for a Year,” Business Insider, January 9, 2016, www.businessinsider.com/what-...chedule-2016-1.
• 27 Roger D. Hodge, “First, Let’s Get Rid of All the Bosses: A Radical Experiment at Zappos to End the Office Workplace as We Know It,” The New Republic, October 4, 2015, https://newrepublic.com/article/1229...self-organized
• 28 Tanza Loudenback, “Why the Maker of Fat Tire Bucked the Trend and Became 100% Owned by Its Workers,” Business Insider, June 13, 2016, www.businessinsider.com/new-b...-jordan-2016-6.
• 29 Chloe Sorvino, “New Belgium’s Kim Jordan Talks about What It Takes to Be America’s Richest Female Brewer,” Forbes, July 16, 2016, www.forbes.com/sites/chloeso.../#76bc9c48b6d3; Dinah Eng, “New Belgium’s Kim Jordan Is Tasting Success in Craft Brewing,” Fortune, June 12, 2014, http://fortune.com/2014/06/12/new-belgium-kim-jordan/.
• 30 Chloe Sorvino, “New Belgium’s Kim Jordan Talks about What It Takes to Be America’s Richest Female Brewer,” Forbes, July 16, 2016, https://www.forbes.com/sites/chloeso.../#76bc9c48b6d3.
• 31 “New Belgium Brewing Wins Ethics Award,” Denver Business Journal, January 2, 2003, https://www.bizjournals.com/denver/s...0/daily21.html.
• 32 “Grants Program,” New Belgium, www.newbelgium.com/sustainab...mmunity/grants (accessed July 6, 2018).
• 33 “New Belgium’s Beer Scouts,” New Belgium, www.newbelgium.com/sustainab...ity/beerscouts (accessed July 6, 2018).
• 34 “Policy and the Craft Beer Industry,” New Belgium, www.newbelgium.com/sustainab...icyandindustry (accessed July 6, 2018).
• 35 “Division President: Jostein Solheim, Ben & Jerry’s Homemade,” Food Processing, January 26, 2011, https://www.foodprocessing.com/ceo/jostein-solheim/ (accessed July 6, 2018).
• 36 “Jostein Solheim,” Conscious Capitalism, www.consciouscapitalism.org/...ostein-solheim (accessed July 5, 2018).
• 37 Bill Snyder, “Jostein Solheim: Do Things You Passionately Believe In,” Stanford Business, April 4, 2017, www.gsb.stanford.edu/insight...nately-believe.
• 38 “Jostein Solheim of Ben & Jerry’s: Empathy Is Not Simply the ‘Flavor of the Month’,” Medium, https://medium.com/change-maker/jost...h-fc8c44242831 (accessed July 6, 2018).
• 39 “Jostein Solheim of Ben & Jerry’s: Empathy Is Not Simply the ‘Flavor of the Month’,” Medium, https://medium.com/change-maker/jost...h-fc8c44242831 (accessed July 6, 2018). | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/12%3A_Appendices/12.02%3A_Profiles_in_Business_Ethics-_Contemporary_Thought_Leaders.txt |
The Nature of Business Ethics
Business ethics should be grounded in deontology more than in utilitarianism. That is, the ends should not typically be considered sufficient justification for the means when it comes to framing a business strategy. Rather, it is the means that ennoble the ends. Utilitarianism, as a consequentialist theory and when applied to business, emphasizes the greatest good (or profit) for the greatest number of shareholders. However, this may be inappropriate criterion for determining what is truly ethical in the conduct of business because business morality should not to be centered only on calculations of profit or loss. Deontology, on the other hand, focuses on the motives and reasons why entrepreneurs engage in business and the methods that they implement in doing so. Ultimately, both theories have a place in business practice, but a preference should be shown to deontology.
The honor or shame that accrues to business as a profession is directly attributable to the ethical practices of its leaders. So, if business as a whole has an unsavory reputation, it is a likely consequence of the practices in which management engages. And while this reputation is not easily changed, it can be improved through a diligent commitment by management to do so.
To pit ethics against profits and insist that a business leader must choose between the two is a false dichotomy. In truth, successful business can be practiced in ethical fashion. Further, ethical conduct by a business will naturally draw the loyalty of many consumers and clients. Not only that, but employees and other stakeholders of that business will also approve, and their relationship to the company might become even closer as a result.
Similarly, it diminishes ethics to insist that it is useful only for keeping business leaders out of jail and avoiding opprobrium, such as through social media. Ethical behavior can keep executives safe from indictment, but it also accomplishes much more. Ethical business practices honor the profession and endow it with integrity and credibility.
When it comes to hiring for and promoting within the workplace, merit and commitment should be assigned the highest value. At the same time, merit should not to be seen as a code word for discrimination; nor should it be disparaged. Business ethics applies to all people equitably in the sense that race, ethnicity, creed, sex, sexual orientation, age, and disability all are irrelevant to the abilities that they bring to the workplace.
The Nature of the Ethical Business Leader
An ethical business leader appreciates the existence of multiple stakeholders and accepts responsibility for all of them. These include employees, shareholders, customers/clients, vendors, suppliers, wholesalers, retailers, and the community as a whole within which a corporation resides. While not all stakeholders are equal in significance, they nonetheless all are significant.
Ethical entrepreneurs are good stewards of the social and physical environments where they do business. They safeguard the earth at the same time that they protect human capital.
In addition, the ethical executive engages in both private and corporate philanthropy. Thus, he or she is willing to commit a portion of the funds of his or her organization, as well as that of his or her personal wealth, to worthy charitable community organizations.
Corporate professionals earn respect through the manner in which they lead and conduct business. There is no positive correlation between the trappings of their success—the homes they own, the cars they drive, the clothes they wear—and their character as human beings. The limousines and jets that they commandeer and the vacation resorts that they frequent are externalities completely unconnected with what Martin Luther King, Jr., called “the content of their character.” If anything, excessive material possessions blind business leaders to their most important managerial tasks.
In truth, leaders who are in business only for the salary and attending perquisites have found the wrong profession, for they will constantly endure frustration in bearing the responsibilities that come with the privileges.
And while successful executives are compensated more than their subordinates, it should not to be many multiples more. The less disparity that exists between the highest- and least-paid members of a company, the greater the level of teamwork and commitment that will prevail among all. In short, people will work harder and make a deeper commitment to a company that has a leadership team with which they can identify.
Additionally, an MBA is not a license for arrogance on the part of its holder. Ethical leaders are justifiably proud of their business acumen, but to lord it over others risks sacrificing their effectiveness as managers. Sometimes the least educated member of a firm may know the most about sustaining the dignity and self-worth of everyone on the team and, therefore, may be the most essential employee for the company to have for that purpose.
An accomplished executive is not insulated from his or her employees and should not be a “sir” or “ma’am” to subordinates, but rather a partner or colleague or coworker, and so, a concerned boss.
In this same way, ethical leaders are welcomed and admired instead of feared and resented. Respect from colleagues, employees, and competitors ultimately cannot be compelled. Instead, it flows naturally from the just and fair ways in which leaders manage and compete.
Worthy managers sustain the dignity and self-respect of all who surround them. This at once acknowledges the basic humanity of those with whom they work and simultaneously inspires them to contribute their best effort.
Similarly, the best business leaders take pride in the accomplishments of the business and its employees. This success may never be accorded directly to managers themselves, but employees assuredly recognize those bosses who help them accomplish their best. Further, it is precisely this kind of leader for whom most employees will be motivated to go above and beyond merely what is required of them on the job.
In short, ethical business executives become the enablers of professional success among their colleagues. This is not in the sense of being a slave to the business and its employees, but rather placing the interests of the firm and one’s coworkers above those of oneself. When this occurs, the enterprise succeeds in a way in which all associated with it may take pride. This is actually the essence of the best business leadership.
A goal of a more egalitarian workplace—one in which managers and employees respect one another—is a renewed sense of loyalty among all who are there. Too often today we witness distrust along the management/labor divide. Each side accuses the other of harboring no commitment except to itself. Unfortunately, the accusation frequently is true. One way to dispel it is for business leaders to take the first steps in restoring the broken sense of obligation that owners and employees owe each other. This may be the most important task of business leadership now and going forward. | textbooks/biz/Business/Business_Ethics/Book%3A_Business_Ethics_(OpenStax)/12%3A_Appendices/12.03%3A_A_Succinct_Theory_of_Business_Ethics.txt |
Understanding Corporations and CSR
The subject of this book is corporate social responsibility (CSR), a broad term that refers generally to the ethical role of the corporation in society. Before we define CSR more precisely and before we explore in depth a number of case studies that illustrate aspects of the ethical role of corporations, we first need to understand exactly what corporations are, why they exist, and why they have become so powerful.
Today, the global role of corporations rivals that of national or local governments. In 2000, it was reported that, of the 100 largest economic organizations in the world, 51 were corporations and 49 were countries.1 General Motors, Walmart, Exxon, and Daimler Chrysler all ranked higher than the nations of Poland, Norway, Finland and Thailand (in terms of economic size, comparing corporate revenues with national gross domestic product, or GDP). This trend has continued, and for the past decade, 40 to 50 of the world’s 100 largest economic organizations have been corporations, with the rest being national economies. In 2012, Walmart was the twenty-fifth largest economic organization in the world, putting it ahead of 157 countries.2
For corporate employees, as for citizens living in communities dominated by large corporations, the corporation is arguably the most important form of social organization. For people such as corporate executives and shareholders, whose lives depend directly on corporations, it is not surprising that company politics often are considered more relevant than national or local politics. Corporations are also a major part of the daily lives of the world’s citizens and consumers. For devoted fans of iconic brands like Nike, Apple, Mercedes, or Louis Vuitton, the corporation can occupy a psychological niche very much like that of a member of the family. Indeed, if many teenagers today were forced to choose between an iPhone and a memorable night out celebrating their parents’ anniversary, the parents would likely celebrate alone. Similarly, those parents might also be loath to part with their cherished products. Dad would not easily say goodbye to his Chevrolet Corvette or Bose stereo, and Mom might not be easily persuaded to part with her Yamaha piano or Rossignol skis.
At the opposite extreme, for citizens who have been harmed physically or financially by corporations—like the Louisiana or Alaska residents whose beaches were fouled by massive oil spills, or the thousands of small investors who found their life savings wiped out by the Ponzi schemes of Bernie Madoff’s investment company—the corporation can seem as dangerous as an invading army, or as destructive as an earthquake.
Despite their vast social role, corporations remain poorly understood by the world’s citizens. While school children everywhere are expected to study the structure and history of their nation’s government, they are not similarly taught to appreciate the functions, motivations, and inner workings of corporations. Let us begin with a brief review of the nature of corporations.
BP oil rig explosion, photo by United States Coast Guard (2010, public domain). Figure 1.1 The 2010 explosion of a British Petroleum (BP) oil rig off the coast of Louisiana, the cause of the worst environmental disaster in U.S. history.
Why Do Corporations Exist?
There were no corporations in ancient Egypt, Greece, or Rome; or in imperial China or Japan; or among the precolonial kingdoms of the Zulu or Ashanti. The Aztecs and Incas had no corporations, nor did the Sioux, Cherokee, or Navajo. It is true that in some classical and traditional societies there were certain forms of communal and religious organizations that anticipated the organizational capacities of corporations, but strictly speaking, they were not corporations.
Corporations are a relatively modern social innovation, with the first great corporations dating from about 1600. Since then, the growth of corporations has been phenomenal. What explains it? Why has the corporate structure been so successful, profitable, and powerful? Here are a few of the distinguishing characteristics of corporations.
Corporations are Creatures of Law
The first point to make about corporations is that they are not informal organizations or assemblies. In order to exist at all, corporations must be authorized by state or national laws. In their daily operations, corporations are regulated by a specific set of laws. Every country has laws that stipulate how corporations can be created; how they must be managed; how they are taxed; how their ownership can be bought, sold, or transferred; and how they must treat their employees. Consequently, most large corporations have large legal and government affairs departments. Since the laws and rules that may constrain corporations are written and enforced by the government, most corporations consider it of vital importance to seek influence over governmental regulators and lawmakers. In most countries, the very largest corporations have privileged access to top decision makers. The extent and reach of corporate influence over governments is one of the most controversial aspects of corporate existence.
Corporations Raise Capital for Major Undertakings
The first great benefit of corporations is that they provide an organized vehicle for pooling cash and capital from a large number of investors so that they can undertake major enterprises. Thus, one great stimulus to the growth of corporations was the rapid growth of international trade between 1400 and 1700 CE. In that era, sending a large vessel across the oceans was a major financial and logistical undertaking, which was also extremely risky; ships were often lost in storms. These early commercial ventures required such large capital investments that, at first, funding them was only within the reach of royalty. American schoolchildren are taught that the legendary explorer Christopher Columbus needed the royal patronage of Queen Isabella of Spain to support the voyages that led to the “discovery” of the New World. However, as new ocean trading routes were established and the vast potential for profits from trading spices became known, the first modern corporations were formed: the English East India Company, chartered in 1600, and its archrival, the Dutch East India Company, chartered in 1602. These companies are considered the world’s first multinational corporations, and they possessed most of the hallmarks of corporate structure that we see today.
Corporations and Other Business Structures
Not all businesses or companies are public corporations. For example, in the US, it is legal to operate a business in your own name (this is called a sole proprietorship) or with partners (a partnership). Corporations also come in a bewildering array of forms. Thus, in the US, we have C corporations, S corporations, benefit corporations (also B corporations), and limited liability companies (LLCs). In the UK, the term company is preferred to corporation, and we will notice that the names of most large UK companies followed by the designation plc or PLC (public limited company), as in Rolls-Royce plc, while smaller companies often have the designation Ltd (private limited company). In France, large companies are usually designated SA (société anonyme), while smaller ones may be known as SARL (sociétéà responsabilité limité). In Germany, large companies are designated AG (Aktiengesellschaft), while smaller ones are known as GmbH (Gesellschaft mit beschränkter Haftung). In Japan, the corresponding terms are KK (kabushiki kaisha) and YK (yūgen kaisha).
All of these terms define two basic aspects of corporations: 1) their limited liability (which applies to all corporations), and 2) their status as a public or private company. Public companies are allowed to sell their shares on public stock markets and tend to be the larger type of company.
The Importance of Limited Liability
Why aren’t all businesses sole proprietorships or partnerships, instead of corporations? The answer is found in the concept of liability, which refers to the risk of loss for debts incurred by the business, or for damages caused by the business.
If you start a business as a sole proprietor or via a partnership, you (and/or your partners) are personally liable for any debts or damage that can be attributed to the particular business. Let us say that you have \$1 million in assets and your good friend has \$2 million in assets. Together, you agree to invest \$250,000 each in a pizza delivery business (the business will start with \$500,000 worth of capital). Unfortunately, in the first month of operation, one of your drivers negligently causes a car accident and severely injures a family driving in another car. The family sues you for their injuries and they obtain a court judgment ordering you to pay \$3 million in compensation. Even though you had intended to invest only \$250,000 in the business, now your entire fortune and that of your friend are likely to be wiped out in satisfying that court judgment. The same sort of result could arise if your business ran up \$3 million in debt that it was unable to pay back. Thus, the founder of a sole proprietorship exposes his/her entire personal assets to the risk that the assets will be seized to satisfy liabilities incurred by the business.
The result can be quite different for a corporation. One of the principal advantages of a corporation, from an investor’s point of view, is that the corporation provides a legal a “shield” from liability. A shareholder of a corporation only risks the stock that the shareholder owns. The shareholder’s personal assets are not in jeopardy. When a corporation suffers an adverse legal judgment and does not have sufficient funds to satisfy the judgment, the corporation simply goes bankrupt. The party or parties who have been injured cannot sue the owners—the shareholders—of the corporation because the corporation acts as a shield from liability.
Why does society allow the shareholders of a corporation to retreat behind the corporate shield, while we do not allow the same for owners of a so-called mom-and-pop business in the form of a sole proprietorship? The main purpose of the liability-shield is to encourage investment in corporations. People are more willing to invest in a corporation (by acquiring stock) because they need not fear that their personal assets can be seized to satisfy the business’s debts or liabilities. The underlying implication is that corporations and corporate investment provide important benefits for society, which explains why governments have been willing to adopt laws that protect and encourage corporate ownership. As many U.S. states learned in the nineteenth century, it can make sound economic sense to attract large corporations because they often become major employers and taxpayers. Corporations may enhance the ability of the local economy to compete with foreign economies that are supported by the productivity of their own corporations.
In many instances the ability of corporations to retreat behind the corporate shield has been controversial. For example, several major airlines (notably American Airlines) have been accused of choosing to declare bankruptcy over finding a way to pay high wages to their pilots and cabin personnel.3 The airlines were attacked by labor unions as having used the bankruptcy as a tactic to avoid meeting the union’s demands for fair wages. Such corporations are able to benefit from an option provided by US bankruptcy law, known as Chapter 11 reorganization, which allows them to enter bankruptcy temporarily. The courts appoint a trustee to run the corporation, and the trustee is empowered to take any actions necessary to reduce the corporation’s debts, including revoking labor agreements with employees. Such corporations can later “emerge” from bankruptcy with fewer employees or with employees earning lower salaries.
Corporations Permit Wealth Creation and Speculation in Stocks
While all corporations possess limited liability, not all of them are permitted to raise money in the stock market or have their shares traded in stock markets. Here, we find the important distinction between public corporations, which may have their shares traded on stock markets, and private corporations, which may not have their shares traded on stock markets.
As a rule, large corporations and multinational corporations choose to do business as public corporations because big companies have such enormous capital needs that they may best raise funds by placing stock for sale in public stock markets. However, this is not always the case; there are some very large corporations that choose to remain private, which means that they raise money directly from investors rather than from making stock available on stock markets.
On the whole, ownership of a corporate interest in the form of stocks is more freely and easily transferable than ownership of an interest in a sole proprietorship or partnership. If you want to sell a mom-and-pop store, you generally have to sell the whole business; you cannot sell a small portion when you need to raise money.
If you are one of the members of a partnership and you want to sell your share, you will generally have to get prior approval from the other partners; needing to do so may discourage possible investors because they may not want to go to the trouble of seeking approval from your partners. However, if you inherit a thousand shares of stock in Apple from your wealthy aunt (which, in 2013, would have had an approximate value of \$420,000), and you find that you need extra money, you can sell one hundred shares (or about \$42,000 worth). Such a transaction is easy because there are lots of investors eager to own Apple shares and you do not need anyone’s approval. This ease of transferability also encourages people to invest in stock instead of in other businesses, because it is so easy to sell corporate stock as needed.
When a corporation grows and/or becomes more profitable, the shareholders benefit financially in two ways. First, the corporation will often distribute a portion of its profits to the shareholders in the form of dividends, a certain annual payment per share of stock. Second, if a corporation is growing rapidly and is expected to be very profitable in the future, more investors will want to own its stock and the price of that stock will increase. Thus, ownership of stock is an investment vehicle that provides many advantages over other types of investments. For one thing, you can own stock without having to personally take part in the management of the company. In addition, you can sell all or part of your ownership when you need the funds. Finally, if the corporation is very successful, it will not only pay a steady revenue stream—through dividends—but your shares will become more valuable over time.
The advantages of stock ownership as an investment vehicle explains the growth of the world’s great stock exchanges, such as the New York Stock Exchange or the Hong Kong Stock Exchange. Stock exchanges are like enormous flea markets for stock, because you can either buy or sell stock there. Unlike the goods available in ordinary markets, though, the price of stocks fluctuates constantly, literally minute by minute. A stock that was worth \$10 last year may now be worth as much as \$1000 or as little as \$0.10. Thus, stock markets are also somewhat like casinos or lotteries, because they allow investors to speculate on the future.
Speculation has its pros and cons. The potential for wealth creation through stock ownership has spawned an important industry that employs hundreds of thousands of people and generates vast profits: financial services. Stock brokerages, investment banks, and trading houses have arisen to provide expert guidance and services to investors.
American colleges and universities have developed a highly collaborative and perhaps even symbiotic relationship with the financial services industry. For one thing, since there are many jobs and professional occupations in financial services, virtually all universities offer courses and majors in finance or financial economics, and many also have graduate business schools that prepare students for careers in the financial services industry.
Perhaps equally importantly, most colleges and universities depend on private and charitable donations to help defray the cost of running the institution and, consequently, to keep tuition rates and fees lower (although many students will find it hard to imagine how tuition could be any higher). When wealthy individuals and corporations make donations or charitable contributions to colleges and universities, they often do so by giving corporate stock. Even when they make a cash donation, the university may find that it is most financially convenient to use that cash to acquire corporate stock. As a result, the largest universities have amassed vast holdings of corporate stock, among other investments. The financial resources of a university are often held in the form of a special trust known as an endowment. Universities prefer not to sell off parts of the endowment but rather seek to cover costs by using the interest and dividends generated by the endowment.
At times, the corporate holdings of universities have become quite controversial. For example, in the 1970s and 1980s, a growing student movement called on universities to divest (to sell all their stock) in any corporations that did business with the racist apartheid regime that controlled South Africa at that time. Many commentators believe that it was this pressure on corporations that led to the fall of the apartheid regime and the election of South Africa’s first black president, Nelson Mandela.
Corporations Can Have Perpetual Existence
It is possible but rare for family-owned businesses to remain sole proprietorships for several generations; more commonly, they eventually become corporations, or they are sold or transferred to a new business operator. Very often, a small business is sold when the founder dies, because the founder’s children or heirs either do not want to work in the family business or are not as gifted in that business as was the founder. Even in successful, family-owned businesses where a child or relative of the founder inherits the business, it still happens that after a generation or two, no further family members are qualified (or wish) to join the business, and the business must be sold.
However, corporations are structured from the outset to have a potentially perpetual existence, because corporations do business through their officers and executives rather than through their owners. Although it is possible for owners to have dual roles as shareholders and as executives, it is not necessary. One common scenario is for the founder of the corporation to act as its chief executive officer (CEO) until such time as the corporation becomes so large and successful that the shareholders prefer to transfer management responsibility to an executive with specific professional experience in running a large corporation.
Disadvantages of the Corporate Form
Separation of Ownership and Management Functions
One potential disadvantage of the corporate form (from the point of view of its founders) is that, as the corporation grows, the original founders may lose control and even be pushed out of the corporation by newcomers. This happened to Steve Jobs, the legendary cofounder of Apple, who was pushed out of his leadership role in 1985 by Apple’s board of directors, only to return in the mid-1990s and retake his role as CEO. More recently, in 2013, George Zimmer, the founder of the apparel retailer Men’s Wearhouse, was terminated as chairman of the board by his own board of directors. This situation can arise because, as a company grows, the founders may be tempted to part with some portion of their equity by selling stock to new investors. Corporations are ultimately controlled by the board of directors, who are voted into office by the shareholders. If a founder allows his or her share of corporate stock to drop beneath 50%, then the founder will no longer be able to elect a majority of the board of directors, and may become subject to termination as an officer by the board. The board of directors is thus a sort of committee that controls the fate of the corporation, and it does this principally by choosing a CEO and supervising the CEO’s performance.
Dual Taxation
Although the tremendous growth in the number and size of corporations, and their ever-increasing social role, is due in part to their advantages as an investment vehicle, there are some financial disadvantages worth mentioning. One of the most important is so-called dual taxation, which refers to the practice in most countries of taxing corporate profits twice: once when the corporation declares a certain amount of profit, and again when the corporation distributes dividends to shareholders. The complexity of corporate tax regulations is such that even small corporations must frequently employ specialized accountants and attorneys to handle their tax returns.
Quarterly Financial Reporting for Publicly Traded Corporations
Another disadvantage applies only to publicly traded corporations. Although all corporations are subject to a number of government regulations, the highest degree of regulation applies to public corporations, which raise capital by selling stock in stock markets. Large corporations are often willing to submit to these burdensome regulations because there are strong benefits to being traded on a stock exchange, the most important of which is the ability to raise a great deal of initial funding when the stock is first made available for trade. This first public sale of stock is known in the US an initial public offering or IPO. In two famous recent examples, Google raised \$1.67 billion with its IPO in 2004, and Facebook raised \$18 billion with its IPO in 2012.
Source: Toms Shoes, photo by Vivianna Love (CC BY 2.0, 2009) Figure 1.2 A well-worn pair of Toms Shoes; Toms gives away free shoes to a poor child for every pair it sells.
Despite the allure of additional financing, a company that is traded on a stock market must make a great deal of financial information publicly available, usually on a quarterly basis, four times per year. This obligation can be quite onerous because it requires the corporation to employ a number of internal accountants as well as outside auditors. In addition, the information that is publicly revealed can be of strategic value to the corporation’s competitors. Moreover, the need to make frequent quarterly reports on the company’s ongoing profitability can have a negative impact on corporate strategy, because executives may become fixated on short-term goals while neglecting long-term goals. In light of these disadvantages, it is not surprising that some public corporations decide to take their shares off the stock markets in a process that is known as going private, which is the opposite of an IPO. Other corporations simply avoid going public in the first place. Thus, there are also some very large corporations, such as the multi–billion-dollar engineering firm Bechtel, which prefer to remain private even though they could raise investment capital with an IPO. Such companies prefer to raise capital by other means to avoid the requirements of quarterly earnings reports and therefore not revealing financial information to competitors.
Corporate Social Responsibility
In this book, we will make continual reference to the concept of corporate social responsibility, but it is important to realize that CSR is an evolving concept that can be analyzed from multiple perspectives. The term CSR may be used quite differently depending on whether a given speaker is looking at it from the point of view of a corporation, a government, a charity sponsored by the corporation, a citizen employed by the corporation, a citizen who has been harmed by the corporation, or an activist group protesting abuses of corporate power. Let us review key concepts and terms related to CSR, starting with CSR itself.
CSR: Definition
We define CSR simply and broadly as the ethical role of the corporation in society. Corporations themselves often use this term in a narrower, and less neutral, form. When corporations have a director of CSR or a committee in charge of CSR, or when they mention CSR prominently in their mission statements, they are invariably using the term to mean “corporate actions and policies that have a positive impact on society.” Corporations refer most frequently to CSR when they speak of civic organizations they support, or to corporate environmental or social policies.
One related term here is corporate “compliance.” Not only are large corporations subjected to a host of governmental regulations, many of which have social objectives (such as avoidance of discrimination, corruption, or environmental damage), but many corporations also have set up internal guidelines. In order to make sure that a corporation respects or complies with all these laws, regulations, and norms, both internal and external, corporations increasingly employ “compliance” officers or executives. For example, large fashion and apparel companies frequently place a specific executive in charge of “human rights compliance,” to ensure that its clothing was manufactured in safe factories that respect labor laws and do not employ children.
Corporate Philanthropy
Corporate philanthropy refers to a corporation’s gifts to charitable organizations. There is an implication that the corporation’s donations have no strings attached, which is probably quite rare. At a minimum, most corporations expect that their donations will be publicly attributed to the corporation, thus generating positive public relations. When corporations make large cash gifts to universities or museums, they are usually rewarded with a plaque, or with a building or library named after the donor. Such attributions burnish the corporation’s public image, and in such cases we are not dealing with true corporate philanthropy, strictly speaking, but something more in the nature of marketing or public relations.
Stakeholder Capitalism
Stakeholder capitalism refers to a conception of the corporation as a body that owes a duty not only to its shareholders (the predominant American view) but also to all of its stakeholders, defined as all those parties who have a stake in the performance and output of the corporation. Stakeholders include the company’s employees, unions, suppliers, customers, local and national governments, and communities that may be affected by corporate activities such as construction, manufacturing, and pollution. Stakeholder capitalism is a concept that was largely developed in Europe and reflects the widespread European attitude toward corporate governance, which accepts a great degree of government and social oversight of the corporation. The American approach is often described, in contrast, as laissez-faire (meaning “leave alone”), in that corporations are granted more freedom of operation than in Europe. One example of a stakeholder approach is in the German practice known as codetermination, in which corporations are required to provide a seat on the corporation’s board of directors for a union representative. This is intended to oblige the corporation to be more cognizant of worker needs and demands, and to ensure that corporate strategies are not concealed from workers.
Cause-Related Marketing
Cause-related marketing (CRM) refers to a corporation’s associating the sales of its products to a program of donations or support for a charitable or civic organization. An example is provided by the famous Red campaign, in which corporations such as Gap pledged to contribute profits from the sale of certain red-colored products to a program for African development and alleviation of AIDS-related social problems. The basic idea of cause-related marketing is that the corporation markets its brand at the same time that it promotes awareness of the given social problem or civic organization that addresses the social problem. Another well-known example is the pink ribbon symbol that promotes breast-cancer awareness and is used prominently in the marketing of special lines of products by many corporations, such as Estée Lauder, Avon, New Balance and Self Magazine. In addition to marketing products with the pink-ribbon symbol, Estee Lauder has made support for breast cancer awareness one of the defining features of its corporate philanthropy. Thus, Estee Lauder also frequently refers to such charitable contributions, currently on the order of \$150 million, in its corporate communications and public relations documents.4
Sponsorship
Sponsorship refers to a corporation’s financial support for sports, art, entertainment, and educational endeavors in a way that prominently attributes the support to the particular corporation. Sponsorship can be considered a form of marketing communications because it seeks to raise awareness and appreciation of the corporation in a given target audience. Arguably, of course, sponsorship benefits society, because society appreciates sports, art, and entertainment. However, in the case of sponsorship, as opposed to philanthropy, the sponsors expect a clear return. Indeed, many corporations carefully analyze the benefits of their sponsorship activities in the same way they measure the impact of their marketing and advertising.
Many prominent global sponsors are companies that find it difficult to advertise through other channels. For example, Philip Morris, the world’s largest tobacco company and owner of the Marlboro brand, which finds its global advertising restricted due to a number of bans and limits on tobacco advertising, has invested heavily in sponsorship. Philip Morris has long been the number one sponsor of Formula 1 race car competitions, and it is impossible for a spectator to watch one of these races without observing, consciously or otherwise, huge billboards and banners featuring the famous red-and-white Marlboro logo. Similarly, since alcohol advertising is also increasingly scrutinized, it is not surprising that Budweiser has followed a similar tactic and become the principal sponsor of NASCAR racing. Pharmaceuticals have also become an area subjected to tight advertising and marketing controls; therefore, Pfizer, the world’s largest pharmaceutical company, engages in scores of sponsorship activities, notably in its support for the Paralympics, an Olympic-style competition for physically-handicapped athletes.
Sustainability
Sustainability has become such an important concept that it is frequently confused with CSR. Indeed, for some companies it seems that CSR is sustainability. This is perhaps not surprising, given the growing media attention on issues related to sustainability.
Sustainability is a concept derived from environmentalism; it originally referred to the ability of a society or company to continue to operate without compromising the planet’s environmental condition in the future. In other words, a sustainable corporation is one that can sustain its current activities without adding to the world’s environmental problems. Sustainability is therefore a very challenging goal, and many environmentalists maintain that no corporation today operates sustainably, since all use energy (leading to the gradual depletion of fossil fuels while emitting greenhouse gases) and all produce waste products like garbage and industrial chemicals. Whether or not true sustainability will be attainable anytime in the near future, the development and promotion of sustainability strategies has become virtually an obsession of most large corporations today, as their websites will attest in their inevitable reference to the corporation’s sincere commitment to sustainability and responsible environmental practices. No corporation or corporate executive today will be heard to say that they do not really care about the environment. However, if we observe their actions rather than their words, we may have cause for doubt.
We will explore specific cases related to sustainability in later chapters. For now, let us just note that CSR, strictly speaking, is broader than environmental sustainability because it also refers to a corporation’s ethical relationship to its employees, shareholders, suppliers, competitors, customers, and local and foreign governments.
More recently, many people have been using the term sustainability also to refer to social and political sustainability, which brings the concept closer to that of CSR.
Greenwashing
Greenwashing refers to corporations that exaggerate or misstate the impact of their environmental actions. By the early 1990s a great number of consumer products were being promoted as “environmentally friendly,” “eco-friendly,” or “green,” when in fact there was little or nothing to justify the claims. In 1991, an American Marketing Association study revealed that 58% of environmental ads contained at least one deceptive claim. As a result, many advertising regulatory bodies around the world adopted specific advertising codes to regulate the honesty and accuracy of environmental claims in advertising. For example, in the UK, a producer of a recycling bin advertised that it helped buyers “save the rainforests” by encouraging recycling of plastic and paper products. The advertisement was found to be misleading because most paper products sold in the UK were not made from wood in tropical rainforests, but from wood harvested on northern European tree farms.
In Norway, car manufacturers and dealers are prohibited from claiming that their cars are green, eco-friendly, etc., because in the view of the Norwegian Consumer Ombudsman, it is impossible for cars to be beneficial for the environment; the best they can do is reduce the environmental damage they cause.5
Greenwashing is not only a corporate practice but a political one as well, as politicians everywhere promise to undertake actions to improve the environment. Thus, the administration of former US President George W. Bush was widely criticized for promoting legislation under the name of the “Clear Skies Initiative,” when in fact the purpose of the legislation was to weaken antipollution measures.6
Social Entrepreneurship and Social Enterprise
Social entrepreneurship and social enterprise refer to the use of business organizations and techniques to attain laudable social goals. As we will discuss further in Chapter 6, Blake Mycoskie decided to create TOMS Shoes largely as a reaction to his travels in Argentina, which had exposed him to terrible poverty that left many school-age children without shoes. An important part of the corporate mission of TOMS Shoes lies in its pledge to give away a free pair of shoes for every pair purchased by a customer. TOMS Shoes’ model has been imitated by many others, including the popular online eyewear brand, Warby Parker.
The difference between social entrepreneurship and CSR is that, with social entrepreneurship, the positive social impact is built into the mission of the company from its founding. Other examples of social entrepreneurship include The Body Shop, Ben & Jerry’s ice cream, and Newman’s Own. The Body Shop was founded by noted activist Anita Roddick who insisted that all products be derived from ingredients which were natural, organic, and responsibly sourced. Her employment policies famously allowed every employee to take off one day a month from work to engage in social or community projects. Similarly, Ben & Jerry’s was founded to promote the use of organic, locally-produced food. The company’s founders insisted on a policy that executives earn no more than seven times the salary of factory line-workers (although this policy was eventually relaxed when it became difficult to recruit a competent CEO at those wages). Ben & Jerry’s engaged in a number of high-profile political activities in which they encouraged their employees to participate, such as protesting the building of the Seabrook nuclear power plant in Vermont. Newman’s Own was founded by film actor Paul Newman and his friend A. E. Hotchner with the goal of selling wholesome products and giving away 100% of the profits to charitable ventures. To date, Newman’s Own has given away over \$200 million.
Social Marketing
Social marketing refers to the use of business marketing techniques in the pursuit of social goals. Often, governments and nonprofit organizations make use of social marketing to make their points more forcefully and effectively to a wide audience. Classic examples are the extremely powerful TV commercials warning of the dangers of unsafe driving or of failing to use seatbelts. Cinematic techniques are employed to portray dramatic, arresting images of crumpled cars and bodies, children and mothers crying. The source of social marketing advertisements is usually a local government or nonprofit organization.
Social marketing is usually used to try to convince citizens to drive more safely, eat better, report child and domestic abuse, and avoid various forms of criminality and drug use. As with ordinary advertising, social marketing can seem overdone or maudlin, and some social marketing ads have been mocked or considered silly. For example, former First Lady Nancy Reagan participated in a social marketing campaign that urged young people to “Just Say No” to drugs, an approach which was ridiculed as simplistic by many. Noted radical activist Abbie Hoffman said that telling drug users to “just say no” to drugs was like telling manic-depressives to “just cheer up.” Despite that, drug use in America declined over the time period that the campaign was in progress, though there is no evidence that any part of this decline was due to the campaign.
Business Ethics
Source: United States Marshals Service, 2004, public domain Figure 1.3 The mug shot of former Enron top executive Ken Lay. Lay was eventually convicted on 10 counts of fraud; while awaiting sentencing of up to 100 years in prison he died of a heart attack in 2006.
Business ethics is an academic discipline closely related to CSR, but one that tends to use the tools of philosophy to formally analyze the ethical role of individuals and corporations. Although the terms are quite similar, there are differences of nuance. For example, although academics who study business ethics tend to focus on corporations, the term itself could also apply to the ethical dilemmas of sole proprietors or of individuals involved in commercial situations, such as a private party trying to sell a used car that he knows has a hidden mechanical flaw. While the term CSR tends to be used by corporations and social entrepreneurs in a way that assumes a positive connotation, business ethics is used in a more neutral and even critical fashion, as one might expect, given the perspective of writers who are not beholden to corporations. Indeed, when the media uses the term business ethics, it is often in a negative sense, to draw attention to instances of deception or fraud on the part of corporations or executives.7
White-Collar Crime
White-collar crime refers to fraudulent or financially-oriented criminal activities by high-status professionals or businesspeople. The term white-collar crime was coined by sociologist Edwin Sutherland, who defined it as a “crime committed by a person of respectability and high social status in the course of his occupation” in a 1939 speech entitled “The White Collar Criminal.” Although the term applies to financial fraud committed by individuals who are not associated with corporations, there is a strong linkage to corporations in actual practice because corporate executives are often well-placed to commit crimes of fraud and corruption. However, a distinction should be drawn between white-collar crime and corporate crime, which refers to crimes for which the corporation itself is responsible. In many cases, such as in violations of US laws against bribing foreign government officials, it may be unclear whether the matter is better classified as white-collar crime or corporate crime. In the law, it may depend on whether the corporation’s senior executives were aware of and supported the acts of criminality.
While there is a popular perception that punishments for wealthy white-collar criminals are less severe than for poor and middle-class criminals, the situation appears to have changed in light of the severe penalties for white-collar crime mandated by the 2002 Sarbanes–Oxley Act, which was adopted by the US Congress in the wake of the notorious Enron scandal. As a result, former Enron CEO Jeffrey Skilling, the architect of Enron’s frauds, was sentenced to 24 years in prison. Bernie Ebbers, former CEO of WorldCom, was convicted of fraudulent misstating of billions of dollars of WorldCom earnings, resulting in a sentence of 25 years. More recently, Bernie Madoff, whose vast Ponzi scheme defrauded investors of up to \$65 billion, was sentenced in 2009 to 150 years in prison for his crimes, effectively a life sentence without possibility of parole.
Topic for Debate: Regulation of Corporations
It is one of the basic premises of this book that we do not want you merely to read and assimilate the material. We want you to engage it personally in an effort to develop and refine your own opinions. Therefore, each chapter will feature a topic for debate (more detailed rules and suggestions for debate will be set forth in the next chapter). Most chapters will feature an in-depth case study based on a real-life business situation, or a fictionalized account of a real business situation or social controversy. In this chapter we will use what we will call a “mini-case study”—a sort of thought experiment, based on a simple set of facts as follows:
Mini-Case Study: The Case of the Undecided Voter
Your close friend, Jane Goodie, is a college student who has registered to vote in her first election. Jane’s father has been a lifelong Republican voter and Jane’s mother a lifelong Democrat. As Jane grew up, she often listened to her parents debating politics at the dinner table. More than once, Jane found herself disconcerted and discouraged by the appearance of biased thinking on the part of one or both of her parents; they rarely seemed to agree or listen to each other in their political debates. Sometimes, Jane even wondered to herself, “Why do they vote at all, since their votes obviously just cancel each other out?” However, since her parents have strongly urged her to vote as soon as she is old enough, and since they have also urged to make up her own mind about which candidate to choose, she is looking forward to expressing her own views at the ballot box. But first she must make up her mind.
Since this is not a presidential election year, the most important office up for election is that of Senator. Both senatorial candidates are very impressive and illustrious people: One is a graduate of Harvard Law School, the other of Yale Law School. The Democratic, or “liberal,” candidate pursued an impressive career as an environmental lawyer before being elected to a position as mayor of one of the leading cities in your state. The Republican, or “conservative,” candidate enjoyed an impressive career as an advisor to a number of successful start-up companies before also being elected to a position as a mayor of one of the leading cities in your state.
Both candidates appear to be exceptionally bright, eloquent, and dedicated to public service. In this particular campaign, they both espouse very similar views on foreign policy and social policy. In fact, the main difference between the candidates comes down to one thing: their attitude toward government regulation of business, and of large corporations in particular. The Democratic candidate, citing recent examples of fraud, pollution, and layoffs at major corporations, is calling for tighter regulation of corporations. The Republican candidate, citing the importance of the business sector as a major taxpayer and creator of jobs, calls for a loosening and reduction of government regulation of business.
Your friend does not know who to vote for, but believes that she should decide on the basis of the single issue on which the candidates differ: the regulation of business. Your friend asks for your advice.
You are therefore asked to develop the strongest reasons for supporting one of the following two possible responses:
Affirmative Position
Jane should vote for the Democratic candidate.
Possible Arguments:
• It is better to maintain tight regulation of businesses and corporations, given their propensity to cause or contribute to social harms.
• Corporations are able to lobby governments to shield themselves from regulation.
• Corporations are able to attain more power and influence than citizens.
Negative Position
Jane should vote for the Republican candidate.
Possible Arguments:
• It is better to liberate businesses and corporations from onerous and expensive government regulation.
• Corporations are major employers and job-creators.
• Corporations can undertake enormous projects beyond the scope of small business or individuals.
• Corporations stimulate research and innovation.
Readings
The readings below are meant only to stimulate your thinking about possible perspectives to take on corporations. Please supplement them with your own research.
1.1 The Corporation as a “Psychopathic” Creature
Bakan, Joel. “Business as Usual,” in The Corporation: The Pathological Pursuit of Profit and Power, 28-59. New York: Simon and Schuster, 2004.
Bakan, Joel. “The Externalizing Machine,” in The Corporation: The Pathological Pursuit of Profit and Power, 60-84. New York: Simon and Schuster, 2004.
Business leaders today say their companies care about more than profit or loss, that they feel responsible to society as a whole, not just to their shareholders. Corporate social responsibility is their new creed, a self-conscious corrective to earlier greed-inspired visions of the corporation. Despite this shift, the corporation itself has not changed. It remains, as it was at the time of its origins as a modern business institution in the middle of the nineteenth century, a legally designated “person” designed to valorize self-interest and invalidate moral concern. Most people would find its “personality” abhorrent, even psychopathic, in a human being, yet curiously we accept it in society’s most powerful institution. The troubles on Wall Street today, beginning with Enron’s spectacular crash, can be blamed in part on the corporation’s flawed institutional character, but the company was not unique for having that character. Indeed, all publicly traded corporations have it, even the most respected and socially acceptable….
As a psychopathic creature, the corporation can neither recognize nor act upon moral reasons to refrain from harming others. Nothing in its legal makeup limits what it can do to others in pursuit of its selfish ends, and it is compelled to cause harm when the benefits of doing so outweigh the costs. Only pragmatic concern for its own interests and the laws of the land constrain the corporation’s predatory instincts, and often that is not enough to stop it from destroying lives, damaging communities, and endangering the planet as a whole…. Far less exceptional in the world of the corporation are the routine and regular harms caused to others—workers, consumers, communities, the environment—by corporation’s psychopathic tendencies. These tend to be viewed as inevitable and acceptable consequences of corporate activity—“externalities” in the coolly technical jargon of economics.
“An externality,” says economist Milton Friedman, “is the effect of a transaction…on a third party who has not consented to or played any role in the carrying out of that transaction.” All the bad things that happen to people and the environment as a result of corporations’ relentless and legally compelled pursuit of self-interest are thus neatly categorized by economists as externalities—literally, other people’s problems.
1.2 “EPA Costs US Economy \$353 Billion per Year”
Young, Ryan. “EPA costs US economy \$353 billion per year.” The Daily Caller. Last modified December 27, 2012. http://dailycaller.com/2012/12/27/epa-costs-us-economy-353-billion-per-year/ .
Transparency is the lifeblood of democracy. Washington needs more of it, especially in the all-too-opaque world of regulation. The Environmental Protection Agency (EPA), for example, is the most expensive federal regulatory agency. Its annual budget is fairly modest in Beltway terms, at a little less than \$11 billion, but that’s not where the vast majority of its costs come from. Complying with EPA regulations costs the US economy \$353 billion per year—more than 30 times its budget—according to the best available estimate. By way of comparison, that is more than the entire 2011 national GDPs of Denmark (\$332 billion) and Thailand (\$345 billion)…
In the last edition of the Unified Agenda, the fall 2011 edition, the EPA had 318 rules at various stages of the regulatory process. Nobody outside the agency knows how many rules it currently has in the pipeline. All in all, 4,995 EPA rules appeared in the Winter Unified Agenda from 1999–2011. Over the same period, 7,161 EPA final rules were published in the Federal Register. That means more than 2,000 final rules, which have the force of law, came into effect without first appearing in the Unified Agenda. This could indicate an important transparency problem.
That’s just the EPA’s annual flow of regulations. The agency has existed for more than 40 years. How many total rules does it currently have in effect? Again, the answer doesn’t come from the agency. Earlier this year, the Mercatus Center’s Omar Al-Ubaydli and Patrick A. McLaughlin ran text searches through the entire Code of Federal Regulations (CFR) for terms such as “shall,” “must,” “prohibited,” and the like. The CFR Title covering environmental protection alone contains at least 88,852 specific regulatory restrictions. The number could be as high as 154,350….
Justice Louis Brandeis correctly believed that sunshine is the best disinfectant. With high regulatory costs contributing to a stagnant economic recovery, it is well past time to shine more light on regulatory agencies. Annual agency report cards would make a good start.
1.3 Press Release from the US Consumer Product Safety Commission
Consumer Product Safety Commission. “Port Surveillance News: CPSC Investigators Find, Stop Nearly 650,000 Unsafe Products at the Start of Fiscal Year 2012.” News Release. April 5, 2012. https://www.cpsc.gov/en/Newsroom/News-Releases/2012/Port-Surveillance-News-CPSC-Investigators-Find-Stop-Nearly-650000-Unsafe-Products-at-the-Start-of-Fiscal-Year-2012/.
Investigators Stop Nearly 650,000 Unsafe Products
Investigators with the US Consumer Product Safety Commission (CPSC) prevented more than half a million violative and hazardous imported products from reaching the hands of consumers in the first quarter of fiscal year 2012.
Working with US Customs and Border Protection (CBP) agents, CPSC port investigators successfully identified consumer products that were in violation of US safety rules or found to be unsafe. CPSC and CBP teamed up to screen more than 2,900 imported shipments at ports of entry into the United States. As applicable, these screenings involved use and abuse testing or the use of an X-ray fluorescence (XRF) analyzer. Their efforts prevented more than 647,000 units of about 240 different non-complying products from reaching consumers, between October 1, 2011 and December 31, 2011.
Topping the list of products stopped were children’s products containing levels of lead exceeding the federal limits, toys and other articles with small parts that present a choking hazard for children younger than 3 years old, and toys and child-care articles with banned phthalates.
In addition to violative toys and other children’s products, items stopped at import included defective and dangerous hair dryers, lamps, and holiday lights.
“We mean business when it comes to enforcing some of the toughest requirements for children’s products in the world. If an imported product fails to comply with our safety rules, then we work to stop it from coming into the United States,” said Chairman Inez Tenenbaum. “Safer products at the ports means safer products in your home.”
During fiscal year 2011, CPSC inspected more than 9,900 product shipments at the ports nationwide and stopped almost 4.5 million units of violative or hazardous consumer products from entering the stores and homes of US consumers.
CPSC has been screening products at ports since it began operating in 1973. In 2008, the agency intensified its efforts with the creation of an import surveillance division.
1.4 “Costs of Air Pollution in the U.S.”
Taylor, Timothy. “Costs of Air Pollution in the U.S.,” Conversable Economist (blog), November 7, 2011, http://conversableeconomist.blogspot.com/2011/11/costs-of-air-pollution-in-us.html.
What costs does air pollution impose on the U.S. economy? Nicholas Z. Muller, Robert Mendelsohn, and William Nordhaus tackle that question in the August 2011 issue of the American Economic Review. Total “gross external damages” the six “criterion” air pollutants in 2002—sulfur dioxide, nitrogen oxides, volatile organic compounds, ammonia, fine particulate matter, and coarse particulate matter—was \$182 billion.
Since GDP was about \$10.5 trillion in 2002, the cost of air pollution was a bit under 2% of the total. The effects included in the model calculations are adverse consequences for human health, decreased timber and agriculture yields, reduced visibility, accelerated depreciation of materials, and reductions in recreation services.
The sectors with the biggest air pollution costs measured in terms of “gross external damages” (GED) (counting the same six pollutants but again not counting carbon emissions) are utilities, agriculture/forestry, transportation, and manufacturing.
If one looks at the ratio of gross economic damages to value-added in the sector, agriculture/forestry and utilities lead the way by far with ratios above one-third. Manufacturing has fairly high gross external damages, but the GED/VA ratio for the sector as a whole is only 0.01.
To me, a lesson that emerges from these calculations is that the costs of air pollution and of burning fossil fuels are very high, both in absolute terms and compared to the value-added of certain industries, even without taking carbon emissions into account. Environmentalists who are discouraged by their inability to persuade more people of the risks of climate change might have more luck in reducing carbon emissions if they deemphasized that topic—and instead focused on the costs of these old-fashioned pollutants.
1.5 “Over-Regulated America”
“Over-regulated America: The home of laissez-faire is being suffocated by excessive and badly written regulation.” The Economist. Last modified February 8, 2012. http://www.economist.com/node/21547789 .
Synthesis Questions
The most productive discussions and debates are those that open our eyes to different perspectives and different ways of thinking. While we may not change our initial opinions, we may emerge with an enhanced understanding of the perspectives of others, or of the complexity of a particular issue.
So we suggest that at the end of each chapter you answer a few questions in a way that allows you to “synthesize” your discussions and readings—by bringing together the strongest parts of each side of the argument—so as to arrive at a deeper, more nuanced understanding of the issues involved.
Clearly, the ethical role of corporations is a vast, complex topic and allows for a great diversity of opinions. Here are three initial synthesis questions for further reflection:
Synthesis Questions
1. Are corporations on the whole good for society?
2. Do you personally like or distrust corporations? Why?
3. How should society regulate corporations?
Endnotes
1. Sarah Anderson and John Cavanagh, “Top 200: The Rise of Corporate Global Power,” Institute for Policy Studies, December 4, 2000. accessed December 6, 2014, http://www.ips-dc.org/top_200_the_rise_of_corporate_global_power/.
2. Vincett Trivett, “25 US Mega Corporations: Where They Rank If They Were Countries,” Business Insider, June 27, 2011, accessed December 6, 2014, http://www.businessinsider.com/25-corporations-bigger-tan-countries-2011-6?op=1.
3. Steven Pearlstein, “Two Can Play the Airline Bankruptcy Game,” Washington Post, 28 April 2012, accessed November 28, 2014, www.washingtonpost.com/business/steven-pearlstein-two-can-play-the-airline-bankruptcy-game/2012/04/27/gIQAJ239nT_story.html.
4. “The Estee Lauder Companies Breast Cancer Awareness Campaign,” accessed November 28, 2014, bcacampaign.com/.
5. “Norway Outlaws ‘Green’ Cars,” TerraPass, September 11, 2007, accessed December 6, 2014, terrapass.com/politics/norway-outlaws/.
6. US Senator Patrick Leahy, “The Greenwashing of the Bush Anti-Environmental Record on the President’s Earth Day Visits to Maine and Florida,” (statement on the Senate floor, Washington, DC, April 26, 2004).
7. See Sebastian Bailey, “Business Leaders Beware: Ethical Drift Makes Standards Slip,” Forbes, May 15, 2013, accessed December 6, 2014, http://www.forbes.com/sites/sebastianbailey/2013/05/15/business-leaders-beware-ethical-drift-makes-standards-slip/. | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/01%3A_Chapters/1.01%3A_Corporations_and_their_Social_Responsibility.txt |
Source: U.S. Navy (CC-BY 2012) Figure 2.1 Deployed U.S. sailors watching the U.S. Presidential debate between candidates Barack Obama and Mitt Romney in 2012.
Why Debate CSR?
In this chapter, we help you prepare for productive debates on CSR. Our first question is: why debate CSR? Why not just study texts on CSR, and then write essays or take tests on the topic? Why do we need to debate?
The position of this textbook is that CSR is not only an important social phenomenon, but a complex and controversial one. As we will see in this book, there are often two sides to CSR issues. As future voters and future employees of corporations, schools, governments, and civil society organizations, you will get a chance to have a real impact on the future of CSR. But what should the future of CSR be? It is not the role of teachers or textbooks to tell you what to think when it comes to such a new and politically divisive topic. Like your fellow citizens, you are entitled to develop your own opinion, but we hope that it will be an informed and logical opinion, rather than one that emerges reflexively from political partisanship or cultural tradition.
In short, we want you to practice thinking for yourself about CSR, and we think the best way to practice is that is to debate crucial issues relating to CSR. At times you will be asked to come up with the strongest arguments in favor of a position that you do not initially support. As the saying goes, to understand another person you have to walk a mile in their shoes. If you want to understand why many of your fellow citizens take social and political positions that are different from yours, the best thing to do is to consider the strongest arguments on their side—and the best way to do that is to become their advocate, even if only for the length of a class session.
Questioning the Value of CSR Itself
As an example of the importance and complexity of CSR-related public debates, consider the following controversies related to CSR:
CSR: Sincere ethics or hypocritical public relations?
• Facts: CSR is a rapidly growing field of study in universities and business schools, and most large corporations have adopted CSR programs.
• The controversial aspect: Is CSR a good thing or is it just corporate window-dressing?
• In favor of CSR: CSR motivates corporations to address social problems, it energizes and rewards workers, it strengthens ties to the community, and it improves the image of the corporation.
• Against CSR: Surveys show that citizens are more concerned about corporations treating their workers well and obeying laws than about engaging in philanthropic activities, and CSR may allow corporations to distract consumers and legislators from the need to tightly regulate corporations.
Climate change and CSR
• Facts: There is a scientific consensus that global warming and climate change represent an enormous threat facing mankind.
• The controversial aspect: Can corporate CSR really have a significant impact on climate change, or is it just a public relations vehicle for companies and a distraction from the need for stronger government action, such as through a carbon tax?
• In favor of global warming–related CSR: Corporations can have a major impact in the battle against global warming by reducing their large carbon footprints, by encouraging other corporations to follow suit, and by helping discover and develop alternative sources of energy.
• Against global warming–related CSR: Companies spend a lot of advertising money to boast about small measures against global warming, but many of these companies are in industries—such as fossil fuels or automobiles—that produce the most greenhouse gases to begin with; self-serving claims of climate-change concern are often simply corporate public relations campaigns intended to distract us from the need for society to take more effective measures through taxation and regulation.
Corporate Lobbying and Government Influence
• Facts: Most large corporations spend money on lobbying and on seeking to influence legislators and regulators. In the Citizens United decision, the Supreme Court ruled that, as “corporate persons,” corporations enjoy the same freedom of speech protections as ordinary citizens and are entitled to relief from strict government control of their rights to political speech.
• The controversial aspect: Many citizens are outraged to find that the justice system accords multinational corporations the same rights as ordinary people on the grounds that corporations are “persons.” However, others point out that The New York Times and CNN are also corporations, and that it could have a chilling effect on freedom of speech if all corporations were legally-constrained from speaking out freely.
• In favor of corporate lobbying: As major employers and technological innovators, corporations benefit society. They should be free to oppose inefficient and cumbersome government regulations and taxation that can limit the benefits they provide. In this way, freedom of political speech is so important that we should be cautious about limiting it in any way.
• Against corporate lobbying: Corporations are not “persons” in the same sense that humans are, and therefore, they should not enjoy the same freedom of speech protection. Since corporations can become vastly wealthier than ordinary citizens, allowing them to participate in politics will enable them to bend laws and regulations to their will.
In each of the debates outlined above, there are intelligent and well-informed people on both sides of the issue. However, if our society is going to progress in its handling of these issues, we will need to reach consensus on the best approach, or at least on the best compromise. It is therefore vital that citizens learn to discuss these issues in an informed, respectful and productive manner.
How to Debate CSR: Rules of Civility and Logic
Civility
This chapter introduces you to the techniques of logical debate. We hope to improve your ability to craft a forceful, persuasive argument and to detect faulty logic and weak evidence put forward by your adversaries. It is equally important, however, to practice engaging in social and political debates in a way that is respectful and tolerant of differing viewpoints.
Although we will base our approach to some extent on the rules and methods of formal debate, the reality of life is that most of our disagreements, and much public debate, are not carried out according to formal rules or any previously agreed structure. Indeed, the average political debate with our schoolmates, work colleagues, and family is often quite freewheeling and sometimes extremely illogical. It is an accepted truism of American life that political campaigns are filled with name-calling, mud-slinging, finger-pointing, and scurrilous attack ads. That is one reason that so many people say that you should never discuss politics or religion among friends or family—because doing so can compromise friendships and spoil family gatherings with angry and unproductive arguments.
In this course and in this textbook, we want to lean toward the other extreme. We believe that there are sincere, intelligent people on both sides of most social debates. As educated people, we should not engage in political discussion in order to flaunt our superior intelligence or backgrounds, or to browbeat or insult our interlocutors. Unfortunately, since people sometimes resort to bullying and offensive tactics when discussing sensitive topics, and since many of us are unable to control our wounded, emotional responses to such aggression, it can become difficult to discuss important social issues in a productive way.
We suggest certain ground rules to promote fair and respectful debate.
1. Do not try to “win” the debate.
In formal debate contests, each side is trying to defeat the other. Similarly, in political debates each candidate is trying to come out on top so as to win the election. However, in the classroom or in informal discussions around the dinner table or at the workplace, such tactics can be unproductive and can backfire.
Therefore, we recommend that (at least part of the time) instructors randomly assign students to each side of an argument. In this fashion, you will sometimes find that you are arguing on behalf of a position that you would not ordinarily support. This may seem paradoxical to you, so why do we insist on its value?
By obliging you to consider and advocate on behalf of the strongest points of each side of the argument, we want you to appreciate that there are valuable, sincere motivations on both sides of most social debates. We are not asking you to be insincere and pretend to believe in something that you do not support. Rather, we are simply asking you to look for the strongest arguments the other side could make.
So, in this course the goal is not to try to win the debate by making the other side look bad. The objective here is to obtain greater knowledge and greater depth of understanding. Everyone in the class should consider it a win anytime fellow students make a new or interesting point, express themselves eloquently, or show a willingness to listen and learn from the other side. The ultimate win in this course is to learn more about an important social topic, and to learn to engage in debates in a respectful way.
2. Admit discomfort or emotionality.
Discussions of important social or political topics often touch upon values that each of us holds dear. They may be values we have imbibed from the teachings of our parents, trusted elders, respected teachers, and admired thinkers. As a result, when someone strongly challenges those values, especially in a way that we find disrespectful, it is understandable that we feel negative emotions or anger. The challenge is to control those emotions without being tempted to retaliate.
So if you ever feel uncomfortable or embarrassed in a class debate, whether online or in person, do not hesitate to let your interlocutor, the class, and the instructor know of your feelings. You can simply say, for example, “I think that last remark was bit personal,” or “I find that the tone you are using is somewhat aggressive.” However, try to avoid responding in an equally offensive fashion because that usually leads to a breakdown in the conversation.
It is not only up to the instructor; it is up to each class member to monitor class discussions for inappropriate levels of aggression or condescension.
3. Listen respectfully and show that you have heard the other side.
It is very easy for debates to degenerate into emotional contests if neither side makes a sincere attempt to listen to the other side’s arguments. Therefore, it is always a good strategy to show that you have heard the other side and have understood their point. For example, you can say, “So it seems that you feel the strongest argument in favor of freedom of corporate lobbying is that if we restrict such lobbying, then we will create a precedent that could eventually lead to restrictions on the freedom of speech of individuals. However, we would like to argue that…”
On political talk shows and at the dinner table, it is quite common for debaters to cut each other off, interrupt rudely, or talk over each other. In the classroom, however, we want to hold ourselves to a higher standard. Let people finish talking before you make your point. If you feel someone is going on too long, you can alert the instructor and request that you be given an equivalent amount of time for your rebuttal.
Logic: The Techniques of Persuasive Argumentation
The Structure of a Debate
Although this is not a course in logical debate, you will get more out of it if you proceed in a systematic manner. Although there are many systems and theories for debate, we present a simplified version here so that your class can have a common framework to follow. The elements of a logical debate are the topic, the argument, and the rebuttal or counter-argument.
The Topic
Sometimes also called the “proposition,” “claim,” or “thesis,” this is the concise statement of what the argument will address. In formal debating, the topic is usually called a proposition and may be presented in the form of a motion that is going to be submitted to a body for a vote, for example:
Resolved, that American corporations should refrain from outsourcing to factories in countries where child labor under the age of 15 is permitted.
Thereafter, one side (sometimes an individual but often a team consisting of up to three people) takes the affirmative position (meaning that it supports the proposition), while the other takes the negative position (meaning that it opposes the proposition). The party taking the affirmative side then opens with a clear formulation of its position and begins the debate by presenting the “main line,” or strongest point on its side. The negative side is allowed to question the manner in which the affirmative side has defined the proposition, and may choose to present an alternative formulation before presenting the main line of its argument. In team debating, the second and third members will then present the second and third lines of their team’s argument. Opportunities for rebuttal may be provided after each speaker or at the end of each team’s main presentation. When the debate is concluded, a vote may be taken (for example, by the audience or by a group of judges) to determine which team has been more persuasive.
In this course, we encourage a more informal approach in order to suit the preferences and prior experience of the instructor and students. You may prefer to present different topics for debate, or provide for a range of alternatives for action. Regardless of the approach you choose, each class and each student should have some freedom to frame the debate in the perspective that he or she finds the most relevant while ensuring that both sides are still engaging the same question. Consequently, it is always a good practice to begin a debate or discussion (or a written assignment) with a clear statement of your topic or proposition, even if it seems implied by the assignment.
The Argument
Once you have clearly stated the debate topic and your opening proposition, you must go on to provide logical support or evidence in support of your argument. In order to persuade an audience, you must support your main thesis with compelling reasoning and/or factual evidence. You may choose to focus on either logic or evidence, or you may use both. For example, if you wanted to base your argument on moral reasoning, you might say,
In the United States, we do not permit full-time factory work for children under the age of 15, so we should not participate in the exploitation of children abroad in a manner we would not accept at home.
Note that this argument, like many other arguments based on logic or reasoning, is itself based on further unstated assumptions, which we may call the logical basis or moral basis of the argument. Thus, the person making the above argument is assuming that
1. it is self-evident that we should not participate in behavior abroad that we do not accept at home (which may or may not be true depending on circumstances); and/or
2. behavior that is not legally accepted in the United States is necessarily exploitative when practiced abroad (which, again, may or may not be the case).
If you wanted to base your argument on factual evidence or statistics, you might say, for example:
Statistics show that countries that permit full-time employment for children have lower levels of literacy.
Or :
Studies show that underage female factory workers are subjected to high levels of sexual harassment and are at greater risk to become victims of rape or violence.
As with arguments based on reasoning, arguments based on evidence also depend on implicit assumptions about the evidence. For example the evidence must be
1. accurate and recent (thus, the statistics should not be derived from unreliably small samples, and they should not be obtained from studies conducted so long ago that they are no longer valid),
2. relevant and logically connected to the argument (thus, the statistics on literacy might show that children raised in the countryside have even lower rates of literacy than urban children who work in factories), and
3. available to be examined (it is very easy to say, “Studies show that . . .” but if you cannot produce any published report of the study, or the study itself, then your argument cannot be considered valid; you might even be misstating the results of the survey).
Rebuttal and Counter-argument
A good debate allows opportunities for each side to respond to the other side’s arguments, and this may be called a rebuttal or a counter-argument.
To develop an effective rebuttal, you should listen carefully to the other side’s argument and try to detect flaws or gaps in their claims, reasoning, or evidence. In classical rhetoric, debaters were trained to detect a number of logical fallacies, common types of arguments which on further examination are unconvincing. Here are some of the key fallacies, or flaws, you may encounter:
Arguing Off-topic
Failure to stick to the main argument is perhaps the most common of all logical fallacies encountered in everyday discussions. In informal discussions, this is sometimes acceptable, but in a serious intellectual discussion, it wastes time and energy because you cannot seriously argue about two different topics at the same time. For example, in the debate described above, one of the parties might say something like,
“Everyone knows that American corporations don’t really care about people; all they care about is profits.”
Not only is that point arguable in itself (though it might make for an interesting argument), it is not directly relevant to a discussion of child labor in overseas factories. In such a case, it is appropriate simply to say, “The point you are making is not relevant to the topic of this discussion.”
Drawing Excessive or Illogical Conclusions from Evidence
In debates over the value of evidence, it is frequently said that “correlation does not prove causation.” In other words, if statistics show a correlation between two sets of facts, they do not necessarily prove a causal connection between them. For example, in one nineteenth century study of tuberculosis in Paris, the researcher noted that tuberculosis most frequently struck people living on the fifth floor of apartment buildings (the highest floor in apartment buildings of the day). He concluded that there was a causal relation between tuberculosis and altitude, and theorized that it was unhealthy to live too high above the ground. In fact, the highest floor was reserved for the small, drafty attic chambers of the poor servants who served the bourgeois families on the lower floors, so the true correlation was between poverty and tuberculosis. Statistics must always be closely scrutinized for relevance. We must always ask whether the statistics apply to the same fact pattern that we are discussing. Also, be wary of statistics that are out of date or are drawn from samples that differ in some fundamental way from the population being discussed.
Ad Hominem Argument
This refers to a statement that attacks you personally (or personally attacks an authority upon whom you are relying), rather than addressing the argument that you are making. In everyday discussions, this is perhaps the most dangerous of rhetorical fallacies. Not only is it irrelevant, but it frequently arouses such negative emotions that the opponent retaliates in kind. Everyone, including the instructor and other classmates, should be attentive to ad hominem arguments, and the person making them should be gently but firmly admonished against this tactic.
The Problem of Cognitive Bias
One of the difficulties encountered in everyday discussions of social and political affairs is that people enter the discussion with their minds already made up. No matter how compelling the reasoning or convincing the evidence, they will refuse to consider the other side. If asked to research the facts, they will only look for facts that support the views they already had. Such people could be said to be wearing “intellectual blinders.” In a classroom or college context, this attitude is unfortunate: It closes us off from learning and from growing intellectually. In order to detect it in others and avoid it ourselves, it pays to learn about this tendency toward stubborn consistency, which is sometimes referred to by psychologists as cognitive bias.
One of the great discoveries of modern psychology is that humans are, in fact, extremely susceptible to biased thinking. Much of our understanding of the powerful influence of cognitive bias is due to the work of two psychologists, Daniel Kahneman and Amos Tversky. (Kahneman won the Nobel Prize for his efforts in 2002.) Kahneman postulates that humans use two different kinds of thinking systems, fast and slow.1 Fast thinking is instinctive, emotional, and reactive, and can be useful in contexts when you have to make a decision quickly (e.g., you see a bear coming toward you in the forest, so it is time to think quickly about climbing a tree). Slow thinking is logical, laborious, and difficult: the kind of thinking that we use when we solve a math problem or a logic puzzle.
Cognitive bias represents the tendency toward instinctive, reflexive modes of thought, or fast thinking, when we might be better off using our slower, more laborious mode of thinking. One might suppose that when it comes to politics and social issues, such as those involved in analyzing corporate social responsibility, people would always rely on slow, logical thinking. However, Kahneman’s research (as well as that of many other cognitive psychologists) indicates the opposite.
Let us consider the power of some important cognitive biases that draw us astray.
Confirmation Bias
Confirmation bias is the human tendency to discredit or ignore information that contradicts our beliefs, while we uncritically adopt information that supports our beliefs. Studies have demonstrated that most people are only open to hearing new information if it confirms their previously-held beliefs.
Confirmation bias explains why information exchange tends to reinforce our beliefs. The more we learn about ethical, social, or political issues, the more biased we become. Confirmation bias is thus the motor of prejudice. Once we get a tiny bit biased one way or another, the confirmation bias pushes us farther and farther in that direction. Increased education and research, strangely, can end up making us all more deeply biased.
In one classic study, a group of pro–death penalty students and a group of anti–death penalty students evaluated two “opposing” studies on capital punishment. In fact, the studies were identical, except that they carried different titles and came to different conclusions. The students were asked to decide which of these studies was better and more convincing (despite their being virtually identical). Almost invariably, the students concluded that the study with the title that supported their pre-existing views was superior to the other study. Not only that, but when the students were asked why they preferred the study they felt was superior, they were able to present a number of highly-specific examples to support their evaluations. Since both studies were based on exactly the same information, the students’ preference for one study over the other was derived purely from bias.
When we are exposed to mixed information, part of it supporting our views and part of it contradicting our views, we are more attentive to the part that supports our views, which we are likely to accept as accurate and true, while we ignore the part that contradicts our views. Indeed, sometimes these contrary arguments barely register in our consciousness.
Partisan Bias
Partisan bias is a form of prejudice and overconfidence that takes hold of people whenever they feel loyalty or affiliation with a group or a team. We witness partisan bias in the political sphere when presidential campaigns are under way, as Democrats are always quick to point out that their preferred candidate is vastly superior to the Republican candidate, while Republicans are equally certain of the contrary.
Partisan bias does not only rule the world of politics, but can occur in any sphere where people feel drawn to one group over another. We can relate this concept to CSR: If you begin to perceive that you are part of a group that is a big supporter of a certain kind of CSR activity, then you will probably be susceptible to the assumption that your group is always right in all aspects. As soon as we feel we belong to a group, we begin to view that group as superior to other groups. It is so easy to elicit group bias that psychologists have proposed the existence of implicit partisanship—a hard-wired human predisposition to take sides and then prefer that side.
One experiment relating to implicit partisanship showed that, if people are shown a list of names and asked to study it for as briefly as a few minutes, they develop a preference for the names on the list and consider them superior to other names.2 In another experiment, a group of college students was assigned to one of two teams to watch a taped football game. The students displayed a clear preference for their assigned team and later argued that the referee had unfairly called fouls against their team.3
If a group of people are told that they will be assigned to either group A or group B according to a coin toss, they begin to prefer their group even before they are sure they are assigned to it. Those to whom it has been merely hinted that they may have been assigned to group B begin nonetheless to express a clear preference for the members of group B and a belief that group B is generally superior to group A.4
While the existence of the partisan bias has been confirmed by recent research, it has long been apparent to perceptive observers of political argument. In fact, Socrates noted the following in Plato’s Phaedo:
The partisan, when he is engaged in a dispute, cares nothing about the rights of the question, but is anxious only to convince his hearers of his own assertions.5
Availability Bias
Availability bias refers to the fact that, in an uncertain situation, people tend to use the most obvious fact or statistic in order to come to a conclusion—even if a moment’s thought or the slightest bit of research would have demonstrated that the particular fact or statistic was unreliable. You can test your own susceptibility to the availability bias by trying to correctly answer the following question as quickly as possible:
Facts: A bat and a ball cost \$1.10 in total. The bat costs \$1 more than the ball.
Question: How much does the ball cost?
Most people answer 10 cents. However, this is clearly wrong, as you will probably realize if you think about it carefully for a few more seconds. The correct answer is that the ball costs 5 cents.
If you answered incorrectly, don’t feel bad—more than half of a group of Princeton students got the answer wrong as well. How is it possible that even smart people can be so dumb when it comes to such a simple question? In Kahneman’s words, “The respondents offered their responses without checking. People are not accustomed to thinking hard and are often content to trust a plausible judgment that comes quickly to mind.”6 Since \$1.10 divides neatly into \$1.00 and ten cents, respondents leaped to this seemingly obvious answer, though it was incorrect. Kahneman named this the availability heuristic, the tendency to rely on a mental shortcut to choose answers from the most obvious (available) options.
Kahneman amusingly illustrated a variant of the availability bias, which he called the anchoring bias. When asked to estimate anything numerically, we have a tendency to over-rely (or “anchor”) on any number that has recently been suggested to us, regardless of its relevance. Kahneman asks an audience to think of the last four digits of their social security number, and then asks them to estimate the number of physicians living in New York City. To a remarkable and entirely illogical extent, people’s subsequent estimates of the number of New York physicians correlated with the last four digits of their own social security number. (Amazingly, this held true even when the audience was composed of math teachers.) Numbers hold a mystical sway over the human brain and it appears we are frighteningly suggestible when it comes to arguments based on data, even when the data is irrelevant. Thus we acquire newfound respect for the prescience of Mark Twain’s famous quip, “There are three kinds of lies: lies, damned lies, and statistics.”
One example of availability bias that comes up in the context of CSR relates to the impact of global warming on polar bears. Global warming contrarian Bjorn Lomborg often uses this example to show that most people think they understand global warming better than they actually do. Thus, he opens his book Cool It with a long chapter that provides abundant statistics to show that, over the past 25 years, the global population of polar bears has been increasing.7 This comes as such a profound shock to most citizens who are concerned about global warming that they can scarcely believe it. Is Bjorn Lomborg telling the truth, or is he pulling our leg? Some students even become angry when presented with the evidence.
Actually, Lomborg does not deny that in the long term global warming may have a highly negative impact on polar bear populations. The point he is trying to make is that people leap to assumptions without checking the facts. People are concerned about polar bears because so many groups that try to raise awareness about the dangers of global warming have used the endangered polar bear as their favored mascot. Consequently, many people have simply assumed polar bear populations were already being decimated by global warming. While, polar bear populations may become under severe strain from global warming in the 21st century, for the past several decades, as well as the current decade, the main danger to polar bears comes from legally licensed hunters.
This point is raised here not to advance any argument about global warming. We will devote an entire chapter to global warming issues, and you will have an opportunity to learn more there about the very real dangers associated with global warming. The point here is that people have a tendency to leap to the easiest assumption, and that is one tendency that we should try to resist when we engage in formal research and debate.
Debating CSR: What are the Key Issues?
As noted at the beginning of this chapter, some people are surprised to hear that there is anything to debate about CSR. After all, such people may ask, isn’t CSR a matter of corporations doing good things? And what could possibly be wrong with corporations doing good things?
Actually, even corporations that fully support CSR do engage in debates about CSR, but these are usually about how to do CSR, not about whether CSR is in general a positive thing or not. Corporations, like individuals, sometimes have to make difficult choices about how to spend their money. It can be quite challenging for a corporation to choose among different options for CSR, and equally difficult to decide how much to spend on a particular CSR project in terms of cash and organizational resources. Several of the case studies in this book deal these types of strategic CSR questions.
However, it is worth noting at the outset that many CSR skeptics also believe that CSR merits greater ethical scrutiny, and thus there are some prominent voices who have expressed doubts about the perceived social benefits of CSR.
So that you can begin to develop your own informed opinion on this topic, let us begin with a review of the potential benefits and drawbacks to CSR.
CSR: Potential Benefits
Neglected Social Problems Are Addressed
It is undeniable that even governments in the wealthiest countries cannot effectively address all social problems. Every society is to some extent plagued by issues such as unemployment, criminality, homelessness, disease, discrimination, pollution, and natural disaster. Why not mobilize the vast economic and organizational resources of corporations to help alleviate the damage caused by such problems?
Corporate Employees Are Energized and Motivated
A large percentage of the workforce in most countries is employed in the corporate sector (38% of Americans are employed by large companies).8 CSR allows corporate employees to feel an added level of meaning in their lives by enriching their jobs with an ethical dimension. Such employees may be more productive on the job and may be more willing to volunteer for community service and contribute to charitable organizations.
Links between Business, Nonprofits and the Government Are Enhanced
Today, a great deal of CSR involves partnerships between corporations, nonprofit organizations, and governmental bodies. For example, the Timberland footwear and apparel company developed a partnership with the Boston-based nonprofit organization City Year in 1989, beginning with a small contribution of 50 boots.9 City Year engages young people from 17 to 24 in a 10-month program of community service. By 1994, Timberland had provided \$5 million to help City Year expand into 6 cities, and by 1998, Timberland employees had contributed 20,000 hours to City Year efforts. President Bill Clinton was so impressed by the City Year story in 1992 that, in 1993, he enlisted its founders to help him establish the AmeriCorps program, a federally-funded means of supporting community service by young people. Since its founding, 575,000 AmeriCorps volunteers have contributed over 700 million hours of community service.
Corporate Image Is Improved
In a competitive global marketplace, corporations want to maintain a strong, positive image in the minds of consumers and legislators, and CSR helps them achieve this. For example, Estée Lauder has become closely associated with the pink ribbon symbol of its Estée Lauder Breast Cancer Awareness Campaign, a program that has raised over \$35 million for breast cancer research and has spread to over 70 countries.
CSR: Potential Drawbacks
Bad Corporations Are Able to Buy a Positive Image
Some of the biggest contributors to CSR are companies in the oil, tobacco, and alcohol sectors, arguably those who have the most to gain from repairing negative associations with the harm caused by their products. Although the World Health Organization has declared that tobacco is the single greatest cause of preventable deaths worldwide, that fact has not stopped global tobacco companies, such as Philip Morris International (owner of the Marlboro brand) from spending huge sums to improve their image. Philip Morris not only contributes over \$30 million per year to a variety of charitable causes in over 50 countries, it is also a leading sponsor of sporting events (notably Formula 1 racing).10
The Public Is Misled on the True Impact of Corporate Activities, e.g., “Greenwashing”
Greenwashing refers to the corporate practice of making misleading environmental claims. By the early 1990s, nearly a quarter of all consumer products were marketed with some sort of environmental claim, using terms such as “green” or “environmentally friendly.”11 So many of these claims were later found to be exaggerated or deceptive that a number of advertising regulatory bodies and consumer protection agencies around the world enacted strict controls on environmental claims in advertising.
Among the leaders in making environmental claims have been oil, chemical, and automobile companies, all of which are arguably linked to increasing levels of pollution. Thus, in Norway, for example, strict regulations prohibit car manufacturers from making virtually any environmental claims, because in the view of the Norwegian Consumers Ombudsman, “cars can’t be environmentally beneficial.”
As early as the mid-1990s, the Chevron oil company had become a leader in touting its commitment to environmentalism, but that did not prevent it from getting embroiled in a controversial lawsuit involving claims of massive amounts of pollution in the Ecuadorian Amazon, with Chevron suffering an adverse \$19 billion legal judgment for the environmental damage it caused. Similarly, BP (British Petroleum), went so far as to revamp the corporate logo in its attempt to become recognized for environmentalism despite evidence that BP management was aware of the risks that led to the offshore oil platform explosion off the coast of Louisiana in 2010, considered the worst marine oil spill in the world and the greatest environmental disaster in the history of the United States. Evidence uncovered in a U.S. Congressional hearing suggested that BP management had overruled its own staff and consultants to undertake riskier procedures because these were perceived to save time and money.12
Nonprofits and Charities May Rely Too Heavily on Corporate Handouts
Many charities and nonprofits come to rely heavily on corporate contributions and often on contributions from a single corporation, which leaves them at the mercy of corporate goodwill, and at the risk of economic or management reversals which could lead to a cutoff of their funds. Thus, in the Timberland–City Year example discussed earlier, by 1997, City Year found that it was almost wholly dependent on Timberland for financial support, and it was only at that point that Timberland and City Year reached out for help from other corporations. Indeed, the City Year sponsorship had even caused a problem within Timberland when the company suffered a sharp decline in revenue in 1995 that led to layoffs. Employees were angry that management continued to spend millions on charitable contributions at the same time it was terminating jobs.
From a similar perspective, consider the cases of Enron and Lehman Brothers, enormous companies that disappeared virtually overnight due to fraud and mismanagement, respectively. Both companies maintained large CSR programs that had to be suddenly abandoned.13 Indeed, Enron had become known as a leading “poster child” for CSR, with widely reported commitments to green energy, so that at the 1997 Kyoto Conference it received an award from the Climate Institute.
Topic for Debate: To CSR or Not to CSR?
You have a close friend, John Goodie, who is considering obtaining a graduate degree in business and is trying to decide between two programs. One program is part of the MBA (master of business administration degree) curriculum at University A, and it focuses on CSR. The other program is part of the MBA curriculum at University B, and it focuses on the management of nonprofits and charities. John has always considered himself a very ethical and responsible citizen and has spent most of his summers since his teenage years volunteering in a number of community service positions. Both schools have excellent reputations, but University B is slightly more prestigious.
John tells you that his ultimate goal is simply “to make the world a better place.” He asks for your advice. What do you tell him? Provide the strongest arguments in favor of either University A or University B, as follows:
Affirmative Position
John should attend University A, which has a strong program in CSR.
Possible Arguments:
• CSR is likely to be the most powerful and effective way of making the world a better place.
• CSR is a rapidly growing field with lots of jobs.
• John is already implicitly interested in CSR since he wants to make the world a better place.
Negative Position
John should attend University B, which is slightly more prestigious but does not have a well-developed CSR program.
Possible Arguments:
• There are problems with CSR, such as greenwashing.
• If John wants to make the world a better place, he will be better off developing his skills in the more prestigious institution.
• With a more prestigious degree, he will be able to get a job in a nonprofit or charitable organization if he wants.
Readings
2.1 CSR Isn’t Working
Morrell, Marcus. “Anita Roddick: Corporate Social Responsibility?” Transcript of video, 5:02. Filmed September 15, 2006. www.globalissues.org/video/733/anita-roddick-corporate-social-responsibility.
Corporate social responsibility, I don’t think it’s working. I think it’s been taken over by the big management houses, marketing houses, been taken over by the big groups like KPMG, like Arthur Anderson. It’s a huge money-building operation now. I think maybe it’s the word “corporate.”
When I was part of the architects of this responsibility business movement, that was so different; that was an alternative to the International Chamber of Commerce, it was a traders’ alliance, it had progressive thinkers, progressive academics, it had, you know, people who were philanthropists.
Things happened. We didn’t see the whole growth of corporate globalization; we didn’t see the immense power of businesses playing, especially in the political arena. We didn’t look at the language, the economic language which was about control, which was about everything had to be for the market economy. We were just flowering around on our own thinking and so we took our eyes off the ball and when we put it on the ball again we thought, “you know, it’s been hijacked, this social responsibility in business”; and it became corporatesocial responsibility.
And it was a huge money-earner, for these big management companies, like KPMG, like Arthur Anderson, like PriceWaterHouseCoopers, all of those. They were making shed-loads of money by actually doing a system of analysis about how you measure your behavior. But it was no good; it was like this obsession for measurement. It wasn’t showing you how you can put these ideas into practice and they never told you it meant a truth—truth that nobody wants to discuss, that if it gets in the way of profit, businesses aren’t going to do anything about it. So we still have rapacious businesses, you still have businesses in bed with government, you still have governments’ inability to measure their greatness by how they look after the weak and the frail. You still have government’s only true measurement of success as economic measurement. And you still have businesses that can legitimately kill, can legitimately have boardroom murder, can legitimately have a slave-labor economy, so that all of us in the West—primarily in the West, or all of us who are wealthy—are guaranteed a standard of living to which we are used to.
But for me, corporate social responsibility in my life, I don’t think it has worked. And that’s a shame. Because it’s controlled the language and it’s hijacked the language.
Morrell, Marcus. “Anita Roddick: Corporate Social Responsibility?” Transcript of video, 5:02. Filmed September 15, 2006. http://www.globalissues.org/video/73...responsibility.
2.2 Paul Newman reflects on founding Newman’s Own
Newman, Paul and A.E. Hotchner. In Pursuit of the Common Good, 197-199. New York: Broadway Books, 2003. Find this book in a library.
I really cannot lay claim to some terribly philanthropic instinct in my base nature. It was just a combination of circumstances. If the business had stayed small and had just been in three local stores, it would never have gone charitable. It was just an abhorrence of combining tackiness, exploitation, and putting money in my pocket, which was excessive in every direction.
Now that I’m heavily into peddling food, I begin to understand the romance of the business—the allure of being the biggest fish in the pond and the juice you get from beating out your competitors. I would like to see the company reach \$300 million in sales, and be able to support new philanthropic initiatives. We were a joke in 1982, but the joke has given away \$250 million so far—so we are a very practical joke.
One thing that really bothers me is what I call “noisy philanthropy.” Philanthropy ought to be anonymous, but in order for this to be successful you have to be noisy. Because when a shopper walks up to the shelf and says, “Should I take this one or that one?” you’ve got to let her know that the money goes to a good purpose. But overcoming that dichotomy has provided us with the means of bringing thousands of unlucky children to the Hole in the Wall Gang Camps.
Since the Connecticut camp opened in 1988, a time when only 30 percent of the children who attended survived, medical progress has been phenomenal, especially in the field of bone marrow transplants; the result is that the percentages have been completely reversed—70 percent of those children who come to camp will now survive; but during the critical time of treatment and recovery we furnish them with much needed respite….
It is also thrilling to note that thirty-five of last summer’s counselors were former campers who had overcome cancer and were now taking care of kids afflicted as they were. At the end of last summer’s session, a counselor who had been a media major in college, on the basis of her experience at the camp changed her course of studies to pursue a medical career in pediatric oncology….
Another experience last summer, a marvelous African-American girl who told me, “Coming up here is what I live for, what I stay alive for during those miserable eleven months and two weeks is to come up here for the summer.”
2.3 “Corporate Conscience Survey Says Workers Should Come First”
Strom, Stephanie. “Corporate Conscience Survey Says Workers Should Come First.” The New York Times online. May 31, 2006. www.nytimes.com/2006/05/31/business/31charity.html?_r=0.
2.4 Corporate Watch Critiques CSR
“What’s Wrong with Corporate Social Responsibility? The Arguments against CSR,” Corporate Watch, accessed November 30, 2014, www.corporatewatch.org/content/whats-wrong-corporate-social-responsibility-arguments-against-csr.
Like the iceberg, most CSR activity is invisible…It is often an active attempt to increase corporate domination rather than simply a defensive “image management” operation.
CSR is supposed to be win-win. The companies make profits and society benefits. But who really wins? If there is a benefit to society, which in many cases is doubtful, is this outweighed by losses to society in other areas of the company’s operation and by gains the corporation is able to make as a result? CSR has ulterior motives. One study showed that over 80% of corporate CSR decision-makers were very confident in the ability of good CSR practice to deliver branding and employee benefits. To take the example of simple corporate philanthropy, when corporations make donations to charity they are giving away their shareholders’ money, which they can only do if they see potential profit in it. This may be because they want to improve their image by associating themselves with a cause, to exploit a cheap vehicle for advertising, or to counter the claims of pressure groups, but there is always an underlying financial motive, so the company benefits more than the charity.
…CSR diverts attention from real issues, helping corporations to avoid regulation, gain legitimacy and access to markets and decision makers, and shift the ground towards privatization of public functions. CSR enables business to pose ineffective market-based solutions to social and environmental crises, deflecting blame or problems caused by corporate operations onto the consumer and protecting their interests while hampering efforts to find just and sustainable solutions.
CSR as Public Relations
CSR sells. By appealing to customers’ consciences and desires CSR helps companies to build brand loyalty and develop a personal connection with their customers. Many corporate charity tie-ins gain companies access to target markets and the involvement of the charity gives the company’s message much greater power. In our media-saturated culture, companies are looking for ever more innovative ways to get across their message, and CSR offers up many potential avenues, such as word of mouth or guerilla marketing, for subtly reaching consumers.
CSR also helps to greenwash the company’s image, to cover up negative impacts by saturating the media with positive images of the company’s CSR credentials….
A prominent case against Nike in the US Supreme Court illustrates this point. When, in 2002, the Californian Supreme Court ruled that Nike did not have the right to lie in defending itself against criticism, chaos ensued in the CSR movement. Activist Marc Kasky attempted to sue the company over a misleading public relations campaign. Nike defended itself using the First Amendment right to free speech. The court ruled that Nike was not protected by the First Amendment, on the grounds that the publications in question were commercial speech. The case proceeded to the US Supreme Court. Legal briefs were submitted to the Supreme Court by public relations and advertising trade associations, major media groups, and leading multinationals, arguing that if a company’s claims on human rights, environmental and social issues are legally required to be true, then companies won’t continue to make statements on these matters.
The submission from ExxonMobil, Monsanto, Microsoft, Bank of America, and Pfizer contended that “if a corporation’s every press release, letter to an editor, customer mailing, and website posting may be the basis for civil and criminal actions, corporate speakers will find it difficult to address issues of public concern implicating their products, services, or business operations.”
This case simply reinforces the criticism that CSR is nothing more than a PR exercise. Corporations would not be so concerned about potential legal actions if they valued truth, transparency, and accountability as much as they claim.
CSR is a strategy for avoiding regulation
CSR is a corporate reaction to public mistrust and calls for regulation. In an Echo research poll, most financial executives interviewed strongly resisted binding regulation of companies. Companies argue that setting minimum standards stops innovation; that you can’t regulate for ethics, you either have them or you don’t; and that unless they are able to gain competitive advantage from CSR, companies cannot justify the cost.
Companies are essentially holding the government to ransom on the issue of regulation, saying that regulation will threaten the positive work they are doing. CSR consultancy Business in the Community supports corporate lobbying against regulation, arguing that “regulation can only defend against bad practice—it can never promote best practice.” These arguments, however, simply serve to expose the sham of CSR. Why would a “socially responsible company” take issue with government regulation to tackle bad corporate practice?
…The argument that regulation would hinder voluntary efforts on the part of the company to improve their behavior has been readily accepted by a government keen to avoid its regulatory duties when it comes to curbing corporate power. The UK Department for International Development (the department charged with tackling global poverty…) dismissed the idea of an international legally binding framework for multinational companies saying that it would “divert attention and energy away from encouraging corporate social responsibility and towards legal processes.” As this quotation shows, without any evidence for its effectiveness, the government is choosing CSR over making corporate exploitation and abuse illegal.
2.5 “Leading Organizations Build Case for Green Infrastructure”
“Leading Organizations Build Case for Green Infrastructure,” The Nature Conservancy, accessed June 11, 2013, www.nature.org/newsfeatures/pressreleases/leading-organizations-build-case-for-green-infrastructure.xml.
Research by experts from industry and an environmental organization finds that incorporating nature into man-made infrastructure can improve business resilience—and bring additional economic, environmental, and socio-political benefits.
Experts from The Dow Chemical Company, Shell, Swiss Re, and Unilever, working with The Nature Conservancy and a resiliency expert, evaluated a number of business Case Studies, and recommend in their newly published White Paper that green infrastructure solutions should become part of the standard toolkit for modern engineers.
Green infrastructure employs elements of natural systems, while traditional gray infrastructure is man-made. Examples of green infrastructure include creating oyster reefs for coastal protection, and reed beds that treat industrial wastewater.
“Instead of thinking about independent solutions, we must look at integrated systems,” said Andrew Liveris, Chairman and Chief Executive Officer of Dow. “Natural systems not only serve multiple functions, but have multiple benefits—often requiring less capital and less maintenance while promoting biodiversity that we all enjoy.”
“Green infrastructure can bring benefits for companies, for communities and for the environment,” said Peter Voser, Chief Executive Officer of Royal Dutch Shell plc. “It can be cheaper, provide new opportunities for engagement with stakeholders, and create wildlife habitats. Green infrastructure should be part of mainstream business thinking.”
“Protecting nature and the services it provides to people and business is one of the smartest investments we can make,” said Mark R. Tercek, president and CEO of The Nature Conservancy.
“This is the case whether we are talking about the production of clean, abundant freshwater, protection from storms, or healthy and productive soils. Green infrastructure solutions also provide many co-benefits, such as wildlife habitat, and typically appreciate over time, rather than depreciate as happens with gray infrastructure.”
Union Carbide Corporation (subsidiary of The Dow Chemical Company) uses constructed wetlands to treat wastewater near Seadrift in Texas.
This 110-acre (approximately 44.5-hectare) engineered wetland was designed to consistently meet regulatory requirements for water discharge from the manufacturing plant, and has operated successfully for over a decade.
Petroleum Development Oman LLC (PDO) uses constructed wetlands to treat produced water from oilfields in Oman.
The Nimr oilfields, in which The Shell Petroleum Company Ltd is a joint venture partner, not only produce oil, but also more than 330,000 m3 of water per day. PDO built the world’s largest commercial wetland, and it treats more than 30% (or 95,000 m3 per day) of the total produced water. This volume would normally require extensive infrastructure to treat and inject the water into a subsurface disposal well. As gravity pulls the water downhill, reeds act as filters, removing oil from the water. The oil is eaten by microbes that naturally feed on hydrocarbons underground. Oil content in the produced water is consistently reduced from 400 mg/l to less than 0.5 mg/l when leaving the wetlands.
Power consumption and CO2 emissions are 98% lower than they would have been with the alternative man-made solution. Also, the wetlands are providing habitat for fish and hundreds of species of migratory birds.
The Nature Conservancy is a leading conservation organization working around the world to protect ecologically important lands and waters for nature and people. The Conservancy and its more than 1 million members have protected nearly 120 million acres worldwide.
Synthesis Questions
1. Are there companies you can name whose social responsibility actions you admire and trust? What do they do that inspires you?
2. Are there companies you can name whose social responsibility actions you would not trust, or even doubt? Which companies are they, and why do they fail to convince you?
3. Would you like to work in the field of CSR? Why or why not?
Endnotes
1. Daniel Kahneman, Thinking, Fast and Slow (New York: Farrar Straus and Giroux, 2011), 19-25.
2. Anthony G. Greenwald, Jacqueline E. Pickrell and Shelly D. Farnham, “Implicit Partisanship: Taking Sides for No Reason,” Journal of Personality and Social Psychology 83 (2002), 367-379.
3. Albert H. Hastorf and Hadley Cantril, “They Saw a Game: A Case Study,” The Journal of Abnormal and Social Psychology 49(1) (1954), 129-134.
4. For a thorough review of the extensive experimental literature on unconscious bias, see Mazarin Banaji and Anthony Greenwald, Blindspot: Hidden Biases of Good People (New York: Delacorte, 2013).
5. Plato, The Dialogues of Plato (Oxford: Clarenden Press, 1921), 439.
6. Michael Schrage, “The Thought Leader Interview: Daniel Kahneman,” Business + Strategy, Winter 2003, accessed November 29, 2014, www.strategy-business.com/article/03409?pg=all.
7. Bjorn Lomborg, Cool It: The Skeptical Environmentalist’s Guide to Global Warming (New York: Vintage, 2010).
8. Kristie Arslan, “Five Big Myths About American Small Business,” Huffington Post, May 24, 2011, accessed November 29, 2014, http://www.huffingtonpost.com/kristie-arslan/five-big-myths-about-amer_b_866118.html.
9. “Integrated Partnership: City Year and Timberland,” SR International, accessed November 29, 2014, srint.org/2010/11/01/integrated-partnership-cityyear-and-timberland/.
10. “Corporate Contributions,” Philip Morris International Management, accessed June 19, 2015, http://www.pmi.com/eng/about_us/corporate_contributions.
11. Joshua Karliner, “A Brief History of Greenwash,” CorpWatch, May 22, 2001, accessed on November 30, 2014, http://www.corpwatch.org/article.php?id=243.
12. “BP Engineer Called Doomed Rig a ‘Nightmare Well’”. CBSNews/CBS/Associated Press, last updated June 14, 2010, http://www.cbsnews.com/news/bp-engineer-called-doomed-rig-a-nightmare-well/.
13. Robert Murphy, “Enron, the CSR Poster Child,” Townhall.com, last updated April 26, 2008, http://townhall.com/columnists/robertmurphy/2008/04/26/enron,_the_csr_poster_child/page/full | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/01%3A_Chapters/1.02%3A_Debating_CSR-_Methods_and_Strategies.txt |
Source: Timothy Krause, (CC-BY 2.0, 2012) Figure 3.1 In 2012, Hurricane Sandy devastated New York City and surrounding areas, leaving hundreds of thousands of area residents without electricity or public services for weeks, and leading to the death of 90 citizens. Could continued climate change lead to an increase in catastrophic weather events of this nature?
The Threat of Climate Change
Climate change is perhaps the most important problem facing the world’s citizens today. In the consensus view of scientific experts, climate change—in particular as manifested through global warming—is likely to produce disastrous social and environmental catastrophes in this century. For example, certain low-lying Pacific islands are in danger of being inundated by rising sea levels. Another fear is that deserts in Africa and the Middle East will not only grow rapidly in size, but eventually will become inhospitable to human and animal life as temperatures rise. Yet another major concern is that the hurricanes and typhoons that regularly pound the world’s coastlines will reach ever-greater levels of destructive power.
Despite these risks, neither the United Nations nor the world’s governments have yet implemented a clear and convincing strategy to fight climate change. Virtually all climate experts agree that the key to stopping or even slowing global warming lies in the urgent reversal of the long-term trend toward increasing atmospheric concentrations of carbon dioxide (CO2). Although there have been many proposals to curb the growth of CO2 emissions, it is not yet clear how a global reduction in CO2 can be achieved. One major roadblock in this effort is that a few of the world’s largest emerging economies, notably those of India and China, are responsible for a large proportion of current global CO2 emissions, but these countries are not yet willing to agree to mandatory limits. Faced with their reluctance, the United States, the world’s second-leading producer of global warming gases, has also refused to commit to mandatory reductions in CO2. In the United States’ view, mandatory commitments must be accepted by all major economies in order to have a real impact. However, in November 2014 the first signs of China-U.S. cooperation on climate change were witnessed when the countries formally announced a mutual commitment to reduce carbon emissions by 2028.1
In this chapter, you will be asked what kind of action a major corporation should take in fighting global warming. Should the corporation spend a lot of money and try to be an industry leader in fighting global warming, or does it make more sense to take smaller, more symbolic actions?
Source: NOAA (National Oceanographic and Atmospheric Administration), 2009, public domain Figure 3.2 Global records of average temperature and carbon dioxide (CO2) concentration show that as CO2 levels have increased over the past century, so have global temperatures.
Basic Terminology
What is generally called climate change or global warming in the popular media is referred to by scientists as anthropogenic climate forcing. Anthropogenic means man-made and specifies that they are talking about global warming that is caused by human activity and not by natural variations in temperature. The global temperature of the earth has varied continuously since the birth of the planet, and even today, some portion of that variation can still be attributed to unpredictable increases and decreases in the amount of solar radiation the Earth is receiving from the sun.2Climate forcing refers to the effect of human activities in pushing the natural variation of the earth’s temperature in one direction or another. From this perspective, global warming is an imprecise term because some of the observed warming of the earth’s temperature may also be due to natural causes or natural variation. Most press commentators prefer to use the term climate change because many of the negative impacts of global warming will be the product of changes in weather patterns. There is thus more to climate change than increased temperatures, and it is even possible that some areas of the planet could experience cooling of temperatures (for example, it has been postulated that continued global warming could disrupt the Gulf Stream, which brings warm Caribbean waters to Europe—thereby leading to much colder European winters).3
Despite these caveats, we will fall back on use of the more common terms, climate change and global warming because they are so widely used by ordinary citizens and policymakers.
Causes: Greenhouse Gases
It is generally agreed that the primary cause of man-made global warming is the accumulation of greenhouse gases (GHGs) in the atmosphere. These gases act as a sort of invisible blanket around the earth, holding in heat and preventing it from radiating out into space. The most important greenhouse gases are carbon dioxide (CO2), methane (CH4), nitrous oxide (NO2) and ozone.4
Carbon dioxide has been a particular focus of anti-global warming efforts. Concentrations are measured in parts per million or PPM (indicating how many molecules of the gas are present in one million molecules of air). The current concentration of CO2 in the atmosphere is approximately 395 to 400 PPM, and CO2 emissions are increasing at a rate of about 3% every year. As a result, human activities currently produce emissions of roughly 35 billion tons of CO2 per year, a 54% increase over 1990 levels.5
Prior the start of the industrial revolution, around 1780, it is estimated that global CO2 concentrations were approximately 280 PPM. In 1958 when CO2 emissions began to be precisely measured for the first time, the atmospheric concentration was approximately 315 PPM. By 1990, CO2 emissions were growing rapidly, and in 2013, occasional measurements of over 400 PPM began to be recorded for the first time, suggesting that a potentially dangerous threshold had been reached.6 It is widely feared that concentrations of 450 PPM or higher would be associated with a global average temperature increase in excess of 2 degrees Celsius, which is considered by many experts to be the threshold beyond which the Earth’s human population is likely to suffer potentially catastrophic effects. As a result, much of the worldwide effort to fight global warming has been focused on reducing the increase in CO2 emissions so that global levels can be kept beneath 450 PPM. However, if nothing is done, some projections suggest that, by the year 2100, CO2 could range as high as 540 PPM to 970 PPM.7 At such high concentrations, scientists fear that climate change could reach a “tipping point,” beyond which temperatures and chaotic weather patterns could accelerate wildly out of control.
It should be noted that, even though most public debate concerns CO2, it is not the only significant GHG. Methane, in particular, also has a potentially important impact on future global warming. In fact, methane is 23 times more powerful than CO2 in terms of its warming effect (that is, methane traps more heat than CO2).8 Some experts argue that the world should focus more on curbing methane than on CO2, largely because it seems easier to control methane emissions without undertaking the major costs and expenses that are demanded by reduction of CO2.
Despite the ongoing controversy over whether methane deserves more attention, the primary concern of policy-makers continues to be CO2. One reason for this focus is that CO2 lasts much longer in the atmosphere than methane does (methane decomposes in 15 to 20 years, whereas CO2 can remain for 50 to 75 years), but another reason is that CO2 emissions are linked to civilization’s relentlessly increasing use of energy, which seems much more challenging to control. Methane is generated primarily by decomposing garbage, by extraction of natural gas, and most colorfully, by the belching and flatulence9 of agricultural animals. Some people find it hard to believe that the burping of cows can lead to a risk of global warming, but agricultural generation of methane is actually quite significant. In addition to the belching of ruminants, the enormous amounts of animal manure generated by agriculture also create significant methane emissions.10 However, current technologies allow for a more optimistic view on reducing methane emissions. For example, landfills for garbage and refuse are now commonly fitted with methane-capturing devices that not only prevent the methane from escaping into the atmosphere, but they even allow the methane to be used to generate clean energy.
Given the importance of controlling CO2 in the battle against climate change, it has become commonplace for policymakers to speak in terms of controlling “carbon” (note that carbon is part of not only the CO2 molecule, but also the CH4 molecule, as well as being present in atmospheric soot, which is also considered a major contributor to warming). Thus, when climate economists are trying to measure the average CO2 emissions produced by an individual, company, or country they often refer to the relevant carbon footprint.11 When policymakers discuss the possibility of discouraging CO2 emissions by taxing them, they commonly refer to this as a carbon tax.12
The primary sources of CO2 emissions are the burning of coal, oil, and natural gas. Every time you drive in a car or fly in an airplane, the car’s or the airplane’s engine burns gasoline to create energy, thereby producing greenhouse gases. When you use electricity to operate devices or appliances like electric lights, televisions, or computers, the electricity they use was most likely generated in a power plant through the burning of coal, oil, or natural gas (though it is true, of course, that a small but increasing percentage of electricity generation is coming from solar and wind power).
Solutions and Responses: Mitigation, Adaptation and Geo-Engineering
Mitigation
The long term solution to global warming is for mankind to further develop renewable or “clean” forms of energy, such as hydropower, solar power, and wind power, which do not generate GHG emissions. However, with the exception of hydropower, renewable methods produce energy at prices that are currently so much more expensive than energy derived from coal, oil, and gas that it seems very unlikely that many countries will switch over rapidly to clean energies.
One well-established form of energy production, nuclear, appears to meet the need for reasonably cheap and plentiful energy produced without generating GHG emissions, but nuclear energy has other strong disadvantages. Nuclear power plants use the controlled fission of radioactive uranium to heat water into steam, which then turns turbines to generate electricity. In their daily operations, nuclear power plants do not produce CO2. However, when the uranium fuel is depleted, it remains dangerously radioactive and must be disposed of carefully.
Even more disturbing, from the public’s point of view, is the danger associated with accidents at nuclear power plants, such as the 1986 Chernobyl disaster in Ukraine, or the 2011 Fukushima Daiichi disaster in Japan. Though such accidents are rare, they can result in the release of highly toxic radioactivity into the atmosphere, which poses both short- and long-term health risks for the surrounding population, and even for distant populations. Following the Fukushima disaster, Germany decided to phase out all use of nuclear energy (in 2010, 17% of Germany’s energy came from nuclear plants).
Meanwhile, however, over 400 nuclear plants continue to operate in 31 countries. A few countries, such as France, Belgium, and Slovakia, derive most of their energy from nuclear plants. Given that such plants can yield a great deal of energy but they do not produce GHGs, they pose a great dilemma for people who are concerned about global warming. On one hand, additional nuclear plants could satisfy the world’s demands for more energy without producing GHGs. On the other hand, a major expansion of nuclear energy production would increase the risk of accidents, which could release dangerous levels of radioactivity. Although some prominent climate change activists, most notably the respected former NASA scientist James Hansen, have called for increased use of nuclear energy as the only realistic way of limiting climate change, such arguments have yet to convince most environmentalists.
Therefore, most experts do not believe that there is any easy fix that will be readily available in the near future to solve the problem of global warming. Consequently, most experts believe that humans should focus on strategies of mitigation, or reducing the negative impacts of global warming until technological progress makes alternative forms of energy cheaper.13 When solar or wind power becomes cheap and powerful enough to permit a worldwide move to clean energies, we will have solved the CO2 problem. However, that point now seems several decades away, possibly even longer.
In the meantime, how do we mitigate the danger of global warming? The key strategy is to gradually reduce our dependence on energy that emits GHG. As we will see, governments all over the world have committed themselves to reducing the amount of GHG each nation emits. They do this by reducing energy consumption and by gradually moving toward increased usage of clean energy. For example, when consumers purchase electronic appliances that use less electricity, or when they switch from cars with gasoline engines to hybrid engines that generate fewer GHGs, the countries in which those consumers live gradually reduce the growth of GHG emissions.
Governments everywhere, from national to city and local administrations, are seeking ways to conserve energy and to encourage consumers to use less energy. Since some companies and countries have had more success in reducing GHG emissions, one policy that has been promoted is to create a market-based mechanism for encouraging reductions in GHG. These mechanisms have alternatively been referred to as cap and trade or carbon offset systems.14
Under a cap and trade system, a government sets a maximum limit on the amount of emissions a company is allowed—the so-called cap. Cap and trade was used in the United States to control acid rain by limiting emissions of sulfur dioxide, but it has never been adopted for controlling climate change by limiting emissions of carbon dioxide.15 The “trade” part of the equation comes in when a company wants, for business reasons, to go beyond the allowed limit. It can do so by trading, or purchasing unused permits from a company that had stayed below its limit. In this way, companies are encouraged to reduce their emissions—because they can sell their unused allowances—while companies that find themselves unable to do so can obtain a measure of flexibility by buying permits.
In 2005, the European Climate Exchange was created in Europe to permit trading of carbon emissions permits. This system worked in Europe because many European countries had committed themselves to mandatory carbon emissions caps under the Kyoto Protocol.16
Similar to the cap and trade system is the use of carbon offsets, which is a voluntary system. With carbon offsets, companies that continue to generate carbon emissions pay other companies or organizations to reduce their emissions. In this fashion, the overall amount of carbon emissions between the two companies should decrease or remain stable. Common carbon offsets include a number of GHG-reduction projects, such as tree plantings, renewable energy expansion, and energy efficiency projects. Even individuals can participate in the carbon offset system. For example, it is well known that one of the easiest ways for an individual to make a negative impact is to take a long airplane flight, because airplane engines produce a great deal of carbon emissions. This can be quite a dilemma, because many people today are very concerned about global warming, yet they still love to travel. One solution is to purchase a personal carbon offset when you take a plane trip. In this way, you can keep from increasing your personal carbon footprint. Al Gore is one prominent individual who travels in this fashion.
Adaptation
Adaptation involves preparing people and countries to better resist the negative impacts of climate change.17 One of the most widely-discussed risks associated with increased global warming is the increased intensity of hurricanes. The harmful impact of such hurricanes can be augmented by a gradual increase in sea level, also associated with global warming.18 For example, it was a combination of a severe hurricane with an unusually high tide that resulted in the devastation and flooding of New York City by Hurricane Sandy in 2012. Adaptation by New York City might involve preventing future encroachment upon the city of hurricane sea surges by building barriers similar to the massive ocean barriers that have been built in the Netherlands.
Geo-Engineering
Often relegated to the realm of science fiction or fantasy by experts, geo-engineering responses continue to be discussed as a possible fallback option if, as seems increasingly likely, humans are unable to reverse the long-term growth of carbon emissions in the twenty-first century. Geo-engineering involves using a number of novel or advanced technologies to reduce carbon emissions or lower the planet’s temperature.19 One example is the massive planting of trees, because trees drain CO2 out of the atmosphere, thereby creating a large “carbon sink” and reducing the level of atmospheric CO2. Another solution, more far-fetched, would be to spray inert sun-blocking gases high into the stratosphere, creating a sort of “global sun-block.” Some concerned scientists are even more frightened by the thought of ill-advised geo-engineering of this nature than they are of global warming itself.
The United Nations and the IPCC
In light of the scientific community’s consensus on the possible danger of continued global warming, in 1988, the United Nations created a special agency to coordinate the world’s efforts to control climate change: the Intergovernmental Panel on Climate Change (IPCC), which brought together the world’s top scientific and public policy experts.20 The IPCC is a large coordinating committee of scientists and government representatives. More than 2500 climate experts are affiliated with the IPCC and about 350 representatives from 120 countries regularly attend the IPCC’s periodic meetings. Although the IPCC does not directly conduct research itself, it summarizes current global warming research into a special document that can be used by governments around the world, the IPCC Summary for Policymakers.21
The IPCC has also produced a few larger, comprehensive surveys called “Assessment Reports,” which seek to consolidate the results of all global warming research to date. The first assessment report was published in 1990 and concluded that man-made emission of greenhouse gases was accelerating global warming. It was estimated that the projected growth in CO2 emissions would lead to a future warming throughout the twenty-first century on the order of 0.3°C per decade.22
The United Nations Framework Convention and the Kyoto Protocol
In 1992, at the so-called Earth Summit in Rio de Janeiro, Brazil, the United Nations undertook concerted action for the first time to fight the danger of climate change, with the United Nations Framework Convention on Climate Change (also known as the Framework Convention, FCCC or the UNFCCC). The UNFCCC eventually was signed by some 190 countries, with 37 countries agreeing to legally-binding limits.23
The UNFCCC is an international treaty that is continually updated. That is why it is called a “framework convention”: The basic framework remains the same, but the specifics of what the signing countries intend to achieve is periodically refined in successive revisions, and these subsequent agreements are named after the city where the main negotiating conference takes place. Recent updates to the UNFCCC have occurred, notably, at Doha, Cancun, and Copenhagen, but the most historic of the UNFCCC updates still remains the famous Kyoto Protocol, the first time that the world’s nations agreed to commit themselves to controlling and reducing carbon emissions.
Dissenting Voices and Public Opinion
Despite the increasing alarm with which the scientific consensus pressures policymakers for convincing solutions, a vocal minority of politicians and scientists has continued to attack the consensus viewpoint. These global warming skeptics have often been derided as irrational and unscientific “deniers” by the media. Many of these so-called deniers, it has been claimed, are actually paid or otherwise indebted to large oil companies and other corporate producers of CO2. However, many of these skeptics have impressive academic credentials, and they have managed to convince a growing number of policymakers and citizens that the consensus viewpoint is either erroneous, alarmist, or overstated.
Some of the critics continue to argue that they are not convinced that increased levels of CO2 will inevitably lead to higher global temperatures, but this is certainly a marginal viewpoint, and very few respected scientists go so far. Notably, Danish economist Bjørn Lomborg, perhaps the most famous representative of the skeptics, admits that global warming is a real and serious threat, but argues that the scientific community is pressing for excessively costly solutions that will not help in the long run. Lomborg believes that sharp reductions in carbon emissions, the principal prescription issued by the IPCC, could be counterproductive, because this would not do much to reduce global warming but could have severe negative impacts on the global economy. Lomborg favors a modest reduction in carbon emissions coupled with heavy investments in scientific research for alternative means of energy.24 Other critics, such as Richard Lindzen, professor of climatology at MIT, question the scientific basis of the consensus view that disastrous warming is an inevitable consequence of increased CO2 levels.25
Case Study: UBS Seeks an Appropriate Global Warming Policy
In 2005, the Union Bank of Switzerland (UBS), one of the world’s largest financial services institutions, was trying to decide what action to take on global warming. Many of UBS’s large competitors, notably Hong Kong Shanghai Bank Corporation (HSBC), had made significant public commitments to help mitigate global warming. UBS wanted to do the right thing, and it also wanted to keep up with its competitors, without spending too much money. UBS was determined to take some concrete action to fight global warming, but it was not easy to decide how much of a commitment it should make—a major commitment, an average commitment, or merely a symbolic commitment.
Some of the steps that UBS could take would actually produce long-term cost savings for UBS, and therefore these actions were clearly in UBS’s interest. For example, UBS could reduce the number of airplane flights taken by its top executives, replacing in-person meetings with international video-conferencing. Such a step would not only reduce UBS’s carbon emissions, it would reduce the cost of sending executives to foreign locations, which was quite expensive. Despite such potential cost savings, it soon became clear that it would cost money for UBS to be able to say it was taking action against global warming.
UBS and CSR
At the time of this case, UBS was one of the world’s largest financial services institutions, with offices in over 50 countries and more than 70,000 employees. The company was organized into several major divisions, including a leading investment bank and a wealth management operation providing special banking services to very wealthy people. Like many other Swiss banks, UBS catered to a sophisticated, global clientele.26
UBS’s commitment to CSR and sustainability went far beyond global warming issues alone. In general, UBS believed that CSR was more than just a business issue; it was also a moral issue and a matter of company values. Consequently, UBS created a special Corporate Responsibility Committee, which was composed of many of the bank’s senior executives. Interestingly, however, UBS did not measure the impact of its CSR activities. In contrast, it carefully measured the impact of its sponsorship activities on the UBS brand. Thus, UBS seemed to draw a distinction between community involvement, from which it expected returns in marketing awareness and public relations, and CSR, which was to be pursued for its own good.27
On the industry level, UBS had begun to develop expertise in analyzing investment funds for their social and environmental responsibility. On the local level, UBS believed in supporting communities through cash donations to educational and environmental projects of \$38 million per year. As for UBS’s own overall environmental impact, UBS audited its own impact by having an independent inspector subject UBS’s activities to an ISO 14001 environmental audit, the world’s leading standard for measuring environmental performance.28
UBS Competitors’ Actions on Global Warming
In researching possible options for its anti–global warming strategy, UBS reviewed the actions taken by its chief competitors. Here is what the research revealed:
HSBC
HSBC, the world’s largest bank, was also the banking industry’s leader in the battle against global warming. As early as 2004, HSBC announced that it would offset 100% of its greenhouse gas emissions through a variety of market-based mechanisms. Among the beneficiaries of HSBC’s offset purchases were a New Zealand wind farm, an Australian waste composter, a German methane reducer and an Indian biomass generator. HSBC’s leadership was widely recognized in industry circles, and included a Sustainable Banking Award from the Financial Times.
Citigroup
Citigroup, which operates Citibank, was also one of the world’s largest financial services companies, managing over \$1 trillion in assets. Citigroup was tackling global warming by compiling records on energy use at all of its company buildings and then using that information to refurbish many of its facilities so as to reduce energy consumption. Citigroup also committed itself to a 10% reduction in its greenhouse gas emissions to be achieved by 2011.
Credit Suisse
UBS’s main competitor in Switzerland, Credit Suisse had announced that all of its buildings in Switzerland would be greenhouse-gas neutral by 2006. In order to fulfill its commitment to achieving a completely neutral carbon footprint by 2008, Credit Suisse ordered nearly 250,000 tons of carbon credits at a cost of CHF 2.2 million.
UBS Four Options for Action
After conducting its research and evaluation, UBS settled on four possible scenarios for action on global warming.29 In the end, it became a question of how much UBS was willing to pay for different levels of reduction of carbon emissions:
Reduction in CO2 emissions
1
CO2 emissions stabilized at 2005 levels
\$2.8–5.0
0%
2
Keep up with competitors
\$3.7–5.9
10%
3
Good public relations
\$6.4–8.6
40%
4
Match industry-leader HSBC
\$9.1–11.3
100%
Topic for Debate: Appropriate CSR Action on Global Warming
The question you are to debate is as follows: If you could advise UBS on what course of action to take, what option would you recommend?
Take a position specifically on what UBS should do about global warming. You must base your arguments to some extent on the statements and publications of scientific and public policy experts.
The debate positions may be formulated as follows:
Affirmative
UBS should adopt the more aggressive, powerful, and costly alternative to fighting global warming, by choosing option 1 or 2 from the list.
Possible Arguments
• Global warming is very serious and all companies should take action.
• UBS is a respected company that will inspire other companies to follow suit.
• All corporations should be part of the solution.
• It will send a message to other financial institutions.
• It will motivate employees by improving perception of their employer.
• It will provide good public relations.
Negative
UBS should settle for a less-costly and -aggressive alternative, by choosing option 3 or 4 from the list.
Possible Arguments
• UBS reduction of carbon emissions will have a minuscule effect on global warming.
• Switzerland is not a major source of carbon emissions.
• UBS clients do not choose UBS because of its global warming actions.
• UBS should focus on banking services and not get distracted by CSR or global warming.
• Banks cannot solve the global warming problem alone.
• Symbolic action is acceptable but strong action is unnecessary. Let HSBC win this battle.
Readings
3.1 “We Can’t Wish Away Climate Change”
Gore, Al. “We Can’t Wish Away Climate Change.” New York Times, February 27, 2010, http://www.nytimes.com/2010/02/28/opinion/28gore.html.
3.2 “The Climate Science Isn’t Settled: Confident Predictions of Catastrophe Are Unwarranted”
Lindzen, Richard. “The Climate Science Isn’t Settled,” The Wall Street Journal, November 30, 2009. http://online.wsj.com/news/articles/SB10001424052748703939404574567423917025400.
3.3 “Climate Change Worse Than Expected, Argues Lord Stern”
Nayantara Nayaran and ClimateWire, “Climate Change Worse Than Expected, Argues Lord Stern,” Scientific American, April 3, 2013, accessed on November 30, 2014, http://www.scientificamerican.com/article/climate-change-worse-than-expected-argues-lord-stern/.
3.4 “Heretical Thoughts about Science and Society”
Dyson, Freeman. “Heretical Thoughts about Science and Society,” inMany Colored Glass: Reflections on the Place of Life in the Universe, 43-60. Charlottesville, VA: University of Virginia Press, 2007.
The Need for Heretics
The public prefers to listen to scientists who give confident answers to questions and make confident predictions of what will happen as a result of human activities. So it happens that the experts who talk publicly about politically contentious questions tend to speak more clearly than they think. They make confident predictions about the future, and end up believing their own predictions. Their predictions become dogmas which they do not question.
Climate and Land Management
…My first heresy says that all the fuss about global warming is grossly exaggerated. Here I am opposing the holy brotherhood of climate model experts and the crowd of deluded citizens who believe the numbers predicted by the computer models…
When I listen to the public debates about climate change, I am impressed by the enormous gaps in our knowledge, the sparseness of our observations, and the superficiality of our theories. Many of the basic processes of planetary ecology are poorly understood. They must be better understood before we can reach an accurate diagnosis of the present condition of our planet. When we are trying to take care of a planet, just as when we are taking care of a human patient, diseases must be diagnosed before they can be cured. We need to observe and measure what is going on in the biosphere, rather than relying on computer models…
Oceans and Ice Ages
We have accurate measurements of sea level going back two hundred years. We observe a steady rise from 1800 to the present, with an acceleration during the last fifty years But the rise from 1800 to 1900 was probably not due to human activities. The scale of industrial activities in the nineteenth century was not large enough to have had measurable global effects. So a large part of the observed rise in sea level must have other causes…
Another environmental danger that is even more poorly understood is the possible coming of a new ice age… If human activities were not disturbing the climate, a new ice age might already have begun. We do not know how to answer the most important question: Do our human activities in general, and our burning of fossil fuels in particular, make the onset of the next ice age more likely or less likely?
The Wet Sahara
At many places in the Sahara desert that are now dry and unpopulated, we find rock-paintings showing people with herds of animals…
I would like to ask two questions. First, if the increase of carbon dioxide in the atmosphere is allowed to continue, shall we arrive at a climate similar to the climate of six thousand years ago when the Sahara was wet? Second, if we could choose between the climate of today with a dry Sahara and the climate of six thousand years ago with a wet Sahara, should we prefer the climate of today?
The biosphere is the most complicated of all the things we humans have to deal with. The science of planetary ecology is still young and undeveloped. It is not surprising that honest and well-informed experts can disagree about facts…
3.5 UBS Ordered to Pay 1.5 Billion Fine for Fraud
Bart, Katharina, Tom Miles, and Aruna Viswanatha. “UBS Traders Charged, Bank Fined \$1.5 Billion in Libor Scandal.” Reuters. December 19, 2012. www.reuters.com/article/2012/12/19/us-ubs-libor-idUSBRE8BI00020121219.
Synthesis Questions
1. Are consumers more likely to buy products from companies that are more active in the fight against global warming?
2. Should companies strive to be industry leaders in the fight against global warming?
3. What is the best overall solution or response to the problem posed by global warming?
Endnotes
1. “U.S. – China Joint Announcement on Climate Change,” White House, November 12, 2014, http://www.whitehouse.gov/the-press-office/2014/11/11/us-china-joint-announcement-climate-change.
2. Matthew Bampton, “Anthropogenic Transformation” in Encyclopedia of Environmental Science, ed., David E. Alexander and Rhodes W. Fairbridge (Dordrecht, The Netherlands: Kluwer Academic Publishers, 1999), 22-27.
3. America’s Climate Choices: Panel on Advancing the Science of Climate Change; National Research Council, Advancing the Science of Climate Change (Washington, DC: The National Academies Press, 2010).
4. Thomas R. Karl TR and Kevin E. Trenberth, “Modern global climate change,” Science 302, no. 5651 (2003): 1719–23, doi:10.1126/science.1090228.
5. D.M. Etheridge et al., “Natural and anthropogenic changes in atmospheric CO2 over the last 1000 years from air in Antarctic ice,” Journal of Geophysical Research 101, no. D2 (1996): 4115–4128.
6. Global Greenhouse Gas Reference Network, “Trends in Atmospheric Carbon Dioxide,” Earth System Research Laboratory Global Monitoring Division, last updated August 8, 2012, http://www.esrl.noaa.gov/gmd/ccgg/trends/index.html.
7. I.C. Prentence et al., “The Carbon Cycle and Atmospheric Carbon Dioxide: Executive Summary,” Chapter 3 in Climate Change 2001: The Scientific Basis, Contribution of Working Group I to the Third Assessment Report of the Intergovernmental Panel on Climate Change, ed., J.T. Houghton et al. (Cambridge, UK: Cambridge University Press, 2001), 185–187.
8. S. Soloman et al., “Net Global Radiative Forcing, Global Warming Potentials, and Patterns of Forcing,” Technical Summary 2.5 in Climate Change 2007: The Scientific Basis (Cambridge, UK: Cambridge University Press, 2007), 31–34.
9. Or in the popular vernacular, “farting.” Ruminants (animals with multiple stomachs, which permits them to digest grasses), such as cows, deer, sheep, goats, and camels, produce significant amounts of methane during their digestive process, known as enteric fermentation. Most of the methane thereby produced comes out the front end of the cow, but significant amounts also come out the other end. Twenty-three percent of the methane produced in the United States comes from livestock.
10. Henning Steinfeld, et al., “Livestock’s Long Shadow: Environmental Issues and Options.” Livestock, Environment and Development, FAO, 2006, 79-122.
11. Laurence A.Wright, Simon Kemp, and Ian Williams, “’Carbon Footprinting’: Towards a Universally Accepted Definition,” Carbon Management 2, no. 1 (2011): 61–72.
12. Peter Hoeller and Markku Wallin, “Energy Prices, Taxes, and Carbon Dioxide Emissions,” OECD Economic Studies, no 17 (Autumn 1991), 92.
13. Brian Fisher et al., “Interaction between Mitigation and Adaptation, in the Light of Climate Change Impacts and Decision-Making under Long-Term Uncertainty,” Section 3.5 in Climate Change 2007: Mitigation of Climate Change, Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, 2007, ed., B. Metz et al. (Cambridge, UK: Cambridge University Press, 2007), 225–233.
14. Jenna Goodward and Alexia Kelly, “Bottom Line on Offsets,” World Resources Institute, 17 (August 2010), 1–2.
15. Robert N. Stavins, “Experience with Market-Based Environmental Policy Instruments,” Discussion Paper 01-58 (Washington, DC: Resources for the Future, November 2011).
16. United Nations Framework Convention on Climate Change, Kyoto Protocol (UNFCCC, 2011).
17. United Nations Framework Convention on Climate Change, “UNFCCC Glossary of Climate Change Acronyms,” accessed November 30, 2014, http://unfccc.int/essential_background/glossary/items/3666.php.
18. Andrea Thompson, “Study: Global Warming Could Hinder Hurricanes,” LiveScience, April 17, 2007, http://www.livescience.com/environment/070417_wind_shear.html.
19. United States Government Accountability Office, Climate Engineering: Technical Status, Future Directions, and Potential Responses (Washington, DC: Center for Science, Technology, and Engineering, July 2011), p. 3.
20. Spencer Weart, “International Cooperation: Democracy and Policy Advice (1980s),” The Discovery of Global Warming, American Institute of Physics, last modified February 2014, http://www.aip.org/history/climate/internat.htm#S9.
21. IPCC, “Summary for Policymakers,” in Climate Change 2007: The Physical Science Basis, Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, ed., S.D. Solomon et al (Cambridge, UK: Cambridge University Press, 2007).
22. United Nations Framework Convention on Climate Change (UNFCCC).
23. “Status of Ratification of the Convention,” United Nations Framework Convention on Climate Change, http://unfccc.int/essential_background/convention/status_of_ratification/items/2631.php.
24. Sophie Elmhirst, “The NS Interview: Bjørn Lomborg,” New Statesman, September 24, 2010, http://www.newstatesman.com/environment/2010/09/interview-gay-climate.
25. William K. Stevens, “Scientist at Work: Richard S. Lindzen; A Skeptic Asks, Is It Getting Hotter, Or Is It Just the Computer Model?” The New York Times, June 18, 1996.
26. “Our Clients and Businesses,” UBS, last modified August 12, 2014, www.ubs.com/global/en/about_ubs/about_us/our_businesses.html.
27. Katharina Bart, “UBS Lays Out Employee Ethics Code,” The Wall Street Journal, January 13, 2010.
28. “ISO 14000—Environmental Management,” ISO, http://www.iso.org/iso/iso14000.
29. Sid Maher, “Europe’s \$287bn carbon ‘waste’: UBS report,” The Australian, November 23, 2011, http://www.theaustralian.com.au/national-affairs/europes-287bn-carbon-waste-ubs-report/story-fn59niix-1226203068972. | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/01%3A_Chapters/1.03%3A_Climate_Change.txt |
Source: Paul and Cathy, Creative Commons License (CC-BY 2.0, 2013) Figure 4.1 Worldwide concern over GMO and GMO-labeling has made leading GMO-seed producer Monsanto one of the world’s most controversial corporations. Here, a pro-labeling activist group is protesting against Monsanto in Columbus, Ohio in 2013.
What Are Genetically Modified Organisms?
No corporate activity today is more controversial than the production and sale of genetically modified organisms (GMOs; another common abbreviation is GM for genetically modified foods). One company in particular, Monsanto, has become so closely associated with GMOs that it has become the target of worldwide criticism and a number of public protests.
Though news articles and editorials appear daily about public interest campaigns against GMOs, many consumers still are not sure exactly what GMOs are or why they are so controversial. As you walk down the aisle of your local supermarket, you may have noticed package labels that state, “This product does not contain GMOs.” Should you buy such products? Should you prefer them to other products that do not make the same claim?
A GMO is any organism whose genes have been modified unnaturally.1 “Unnatural” gene modification involves isolating a gene from one species and splicing it into another. For example, this could involve isolating a mildew-resistant gene from one plant and splicing it into a different species of plant in order to create a product that stays fresh longer.2 In one sense, genetic manipulation is quite ancient. Ever since the origins of agriculture thousands of years ago, farmers have known how to improve crop quality by selectively breeding strains of vegetables, fruit, or grain. However, such hybrids are not GMOs because the process of creating them does not involve the transfer of genes from one species to another.
The term GMO refers not only to food products, but also to animals, insects, and medications that have been produced through genetic modification. The first medicine produced through genetic engineering was insulin. Previously, insulin for diabetes patients had been harvested from animals.3 Introduction of GMO-derived insulin reduced dependence on animals for the creation of this drug, and also reduced the number of negative allergic reactions among diabetes patients who were sensitive to animal-derived insulin. Genetic engineering has been used to develop medicines and treatments for a number of diseases, including cancer. This ability to engineer the genetic make-up of an organism has been referred to as conscious evolution.4
Genetically modified crops can be designed to provide benefits for producers or consumers. To date, the primary focus has been on improved farming productivity. Most GMO crops available today were created to be resistant to specific pests, pesticides, diseases, or difficult environmental conditions such as flood or drought.5 For example, one of the most commercially successful genetic modifications for crops is one that makes them resistant to glyphosate, an especially effective herbicide developed by Monsanto and sold under the trademark Roundup, but which is now produced by many other companies.6 Monsanto has developed seeds for GM crops that are resistant to glyphosate and are therefore marketed as “Roundup Ready.” By using GM crops that are resistant to glyphosate, farmers can control weeds more easily. This allows farmers to increase harvests while using less labor, because there is less need to plow fields once they have been cleared of weeds with glyphosate. Clearing weeds also reduces the presence of insect predators that could diminish crop yields.
One commonly cited example of the potential benefits of GMOs comes from the extensive reliance on GM crops in China, which has allowed China to greatly improve farm productivity.7 Cotton plants genetically modified to be resistant to local pests are already widely-used in China. By switching to this cotton, use of pesticides has decreased by 80%.
Genetically modified organisms play a larger role in our world than most Americans realize. In the United States today, over 90% of soybean, cotton, corn, and other crops are genetically modified.8 If you were not aware of the extent of GMO usage, you are not alone. A 2005 survey asked Canadians, Americans, and Britons if they were paying close attention to genetic engineering in their medication and food: Only 9% of Americans reported that they paid close attention to the issue and 31% were somewhat interested, but 25% answered that they had not paid any attention to the issue, and an additional 35% had paid little attention.9
Arguably, one of the reasons the public does not know more about genetically modified organisms is that research in the field is primarily conducted by the main companies who develop GMOs, and these companies do not wish to alarm the public.10 Large corporations have dominated the world of genetic engineering since the Supreme Court ruled that genes could be patented.11 Patent protection and enforcement by large corporations make it difficult for smaller companies or research firms to enter the genetic modification market. As a result, it is difficult for independent researchers to study patented genes without approval from the companies that own them.12
In the view of GMO skeptics, available research on GM food is usually biased in favor of GMOs.13 It has been alleged that independent researchers who threaten the interests of the large corporations risk losing research funding.14 The relative lack of independent research makes it more difficult for the general public to arrive at an informed, objective opinion. Many of the articles, websites, and other publications on this topic are biased: They either are produced by corporations that have developed GM foods, or they are published by lobby groups who are strongly opposed to GM foods.
GMOs and Biodiversity
The impact of GMOs on biodiversity is widely debated. Pro-GMO researchers maintain that if crops are genetically modified for pest resistance, farmers can reduce their reliance on insecticides, so that local fauna, such as birds, rodents, and insects, can flourish in the area. Secondary pests that would have been eliminated through widespread insecticide application are not suppressed by the scaled-back insecticide use permitted by GMOs. Because these secondary pests remain, other small predators—the birds and rodents that feed on the secondary pests—remain viable.15 In addition, the development of drought-resistant or flood-resistant crops allows arid or flood-prone land to be used for growing crops. This means that less high-biodiversity terrain needs to be converted for farming.16
On the other side of the debate, GMO skeptics have argued that up to 75% of plant genetic diversity has been lost since farmers switched to uniform GM crop varieties. In this view, less popular, non-GM seed varieties are being neglected.17 Moreover, widely used GM crop varieties can spread to neighboring fields and eventually mix in with non-GM crops. A farmer who wishes to continue using a non-GM seed variety, or who desires to maintain the organic status of his crops, must adopt potentially expensive measures to protect his crops from contamination or cross-pollination with his neighbor’s GM crops. It has also been argued that the over-popularity of certain GM crops may lead to greater susceptibility to pests and disease.18 Pests may evolve to target the monoculture of popular and overused crop varieties. Moreover, it has been argued that the evolution of glyphosate-resistant weeds has required farmers to make ever-greater use of glyphosate, the toxicity of which poses dangers for human health.
It has been hypothesized that GM crops can harm insect species that are not pests. Insects that feed on GM crops will carry GM pollen, which may prove toxic in the long term and result in depletion or even extinction of insect populations.19 The genetic integrity of any plant or insect that lives in close proximity to GM crops can be compromised because gene transfer from one organism to another can occur, and such genes may pose unanticipated risks. GM traits have been found transferred to insects, water life, and soil.
GMOs and Food Supply
It is frequently argued that GM crops are helping farmers solve the world’s hunger problems. Conceivably, GM crops help improve food sustainability, enhance environmental farming methods, and produce more nutritious food. Thus, it is generally accepted that GM crops can yield greater amounts of food (though not in all cases). Since GM crops can be designed to grow at a uniform speed and size, harvesting is simplified and yield is increased.20 GM crops are commonly engineered to require fewer pesticides and to be planted with no-till methods, thereby decreasing erosion, fuel consumption, and herbicide use. Moreover, GM crops can yield more nutrients. For example, the widely cited example of the GM crop known as Golden Rice illustrates the use of GM techniques to develop food staples with higher-than-usual nutrient levels. Proponents contend that, in the long term, Golden Rice and similarly nutrient-enhanced GM crops can help reduce malnutrition in developing countries. Supporters of GM crops argue that over-regulation of the GMO industry limits the realization of potential benefits from GM food. As a result, consumers in developing countries are deprived of potential public health benefits.
On the other side of the discussion, advocates for organic farming methods argue that sophisticated organic farming can actually produce higher crop yields than GM crops. Proponents of this view argue that world food problems are more often caused by poor distribution rather than a lack of available food. Improving the availability of food through the increased yields of GM crops cannot solve distribution problems. Anti-GMO groups also maintain that GM crops make farmers reliant on corporations that supply seeds and chemicals, thereby perpetuating poverty by yoking farmers into a cycle of dependence.21
The Case for GMOs and against Labeling
Given the above-described debates over the impact of GMOs on food supply and biodiversity, it is clear that there is strong support for GMOs as well as a determined lobby against them. While it currently seems unlikely that any major food-producing nations will outlaw GMOs, a vigorous debate is taking place on the mandatory labeling of foods containing GMOs. Opponents of mandatory labeling contend that GM foods are safe and do not require labels, while proponents maintain that consumers have a right to know what is in their food.
The American Association for the Advancement of Science (AAAS), an organization that promotes scientific integrity and publishes the journal Science, has stated that attacks against GMOs and the fight to have them labeled can cause unnecessary alarm among consumers. The AAAS considers fears about GMO safety unfounded.22 The AAAS has pointed out that other types of natural breeding are universally encouraged and that genetic modification is fundamentally no different and no more harmful than these natural methods.23 The AAAS argues that since GM foods and non-GM foods are nutritionally equivalent, labeling of GM foods could lead consumers to erroneously believe that GM foods are harmful.
Other opponents of mandatory labeling argue that genetic modification of food is not different from the widely accepted practice of adding fluoride to our water, which does not require labeling under American law.24 Since labeling would discourage the use of GM ingredients in food products, we would essentially be preventing better food products from reaching consumers. For example, genetic modifications can eliminate fungal infections in foods that might otherwise cause sickness or lead to expensive food recalls.25 Greater regulation of GM foods could generate unfounded suspicion of good food products, and this suspicion could hinder further GM development and research.26
Unnecessary regulation of GM crops could also cause hardship to farmers. It has been claimed that some farmers have lost income because they cultivated GM crops that had been approved but were subsequently rejected for use as a result of lawsuits or revocation of USDA approval.27 Likewise, developers of GM crops have faced difficulty in trying to research and develop new seed varieties because regulations limit their ability to plant test crops outdoors.
The Case against GMOs and for Labeling
The anti-GMO lobby has called for labeling of all GMO food products so that consumers can make informed choices about whether to avoid the potential harm from GMOs. One widely publicized and highly controversial study published in 2012 examined laboratory rats that had consumed Roundup Ready corn—including both corn that was Roundup Ready but had not been sprayed with Roundup, and corn that was Roundup Ready and had been sprayed with Roundup. The researchers observed death rates two to three times higher among the Roundup Ready–fed rats than in the control group, in addition to major kidney impairments.28 This research was notable because most research conducted by corporations that develop GM foods is based on a ninety-day observation period. However, the study by Séralini et al. tracked the research animals for a period of two years, allowing for observation of long-term effects. The authors of this study pointed out that no regulatory body requires GM foods to be tested for consumption on animals before being sold to humans. Many GMO detractors seized upon this study as evidence that GM food is potentially dangerous. Since its publication, however, the study has been challenged by other scientists and was formally retracted by the publishers of the scientific journal in which it appeared.29
Another study examined pregnant mothers who ate GM corn, which had been modified with a pesticide-resistant gene that has been shown to cause tissue and autoimmune damage in mice.30 The study revealed that 93% of pregnant mothers tested positive for a toxin from the pesticide-resistant gene in their blood. The toxin also showed up in 80% of the umbilical blood of their babies. In addition, the authors of this study mention that farm laborers who work with this type of GM crop report serious allergies, and that animals grazing on these GM crops have higher death rates.
As mentioned above, independent research on GM food is difficult to conduct and is therefore scarce. However, there are a small number of studies that do suggest that GM food can cause impaired liver and kidney function as well as impaired embryo development. In addition, it has been conjectured that GM foods cause antibiotic resistance, and that they provide less nutrition because they may have lower levels of naturally occurring nutrients or hormones.31 Additionally, GM foods are alleged to pose higher risks for allergy sufferers. Clear labeling would allow individuals who may be especially susceptible to the harms of GMOs to avoid GMO foods.
Many anti-GMO groups argue that not enough research has been done to know if GM crops are safe for human consumption.32 Groups like Greenpeace and Friends of the Earth have warned consumers that there is no solid evidence that GM food is safe for consumption.
At present, the only way a consumer can be confident that he or she is not purchasing GM food is by buying food with an “organic” label: The USDA only permits this label to be used on food products that are GM free.33 As an alternative, some companies voluntarily label their food as GM free to indicate that it has no traces of GM ingredients. This label is not regulated, however, and no inspection is conducted to ensure that all foods with this label are in fact free of GM ingredients.
According to a 2011 study of over one million Americans by the Mellman Group, 93% of poll respondents said they would like food with genetically engineered ingredients to be labeled as such.34 Approximately 75% of poll respondents were worried about the health effects of GM food, and 37% of respondents feared increased risks for cancer or allergies from these foods. Among those concerned about GM food, 26% thought these foods were not safe to eat and 13% worried about environmental problems caused by GM crops and foods. Forty percent of respondents thought that the fruits and vegetables they purchased were likely genetically modified; half of respondents said they would not eat modified veggies, fruits, and grains. Two-thirds of people surveyed claimed that they would not eat genetically modified meat.35
Labeling is admittedly difficult to introduce, due to both the cost and the complexity of food production. Many food companies today may be unaware of the extent to which their products contain GM ingredients. Consequently, in order to be effective, labeling must start at the very root of the food chain, when a GM seed is planted and grown into a GM crop.
GMO Labeling Around the Globe
While GM foods are freely grown in the United States, other regions, most notably the European Union, enforce strict regulations on GM crops.36 The European Food Safety Authority examines three aspects of GM food: genetic composition of the food, risk, and environmental impact. The European Union requires labeling because it believes that consumers should be able to make informed choices.37 Labeling of all GM food is mandatory in the European Union and in over 60 countries around the world, including China, Japan, and Australia.38 In other countries, such as Canada, labeling remains voluntary.39
Australia has imposed a strict regulatory framework for dealing with GMOs. Notice must be given of all applications for licensing of new GMOs. Following this, invitations to comment on these applications are widely published and feedback is invited from individuals, nonprofit organizations, researchers, and experts in the field. A separate regulatory body, staffed with experts in the field of GMO research, has helped ensure the success of this program by maintaining high standards for reporting and debate. Unfortunately, Australia’s regulatory system has not worked as smoothly as expected. Lobbying by strong interest groups continues to delay the release of some approved GMO products. However, proof of the regulatory system’s effectiveness has been shown through changed public opinion toward GMOs in Australia. As public education has increased and transparency about GM products has improved through this regulatory process, attitudes toward GMOs have become more positive.40
The Philippines contemplated introduction of mandatory labeling over the last decade and decided against it. A study of Filipino food production and the retail system concluded that labeling for GMO foods would result in cost increases of up to 12% for manufacturers. If any of this increase were passed along to consumers, in a country where 54% of the average household budget is already allocated for food, consumers would be less likely to buy the labeled GMO products.41
Approaches to Labeling in the United States
A number of reasons have been advanced for strengthening regulation of GMOs in the United States, most notably that American farmers have suffered from the misuse of GM food products. In 2008, the United States was responsible for about 50% of GM crops planted globally, including 80% of GM corn, 92% of GM soybeans, and 93% of GM canola. It has been reported that over 70% of processed food sold in the United States contains GMOs.42 In the past, accidental release of unapproved GE crops into the market has led to trade embargos by other countries that enforce more stringent control of GM products, resulting in losses for American farmers.43
Several states have begun independently looking at mandatory labeling for GM foods within the state. Connecticut, Hawaii, and Maine passed bills in 2013 to require various levels of labeling for GM foods. Hawaii’s legislation is the most detailed, requiring labels on GM foods imported from outside the state of Hawaii, as well as labels related to the sale of GM fish products. In 2013, New Hampshire’s House of Representatives proposed a GM labeling system, which was approved for further study by the State Senate in January 2014.44
As of October 2013, bills for various degrees of mandatory labeling had been proposed and were awaiting a vote in Alaska, Arizona, Illinois, Indiana, Iowa, Massachusetts, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Tennessee, Washington, and West Virginia. Bills for mandatory labeling had been proposed and voted down in Colorado and New Mexico. A bill for mandatory labeling was introduced in Florida but died in committee, and a bill for labeling was introduced in Maryland but was subsequently withdrawn as a result of an unsupportive report from the state’s Health and Government Operations committee.45
One of the most publicized campaigns for labeling was California’s Proposition 37. Proposition 37 required labeling of all GM food, and it forbade food producers from using the word “natural” on any food containing GM ingredients. Ultimately, it was defeated 53% to 47% in the 2012 elections. Had it passed, California would have been the first state to adopt anti-GMO legislation. The California Right to Know campaign raised major support, but a strong “No on Prop 37” campaign was also mounted with massive funding from corporations such as Monsanto and Hershey’s.46 While this bill was ultimately unsuccessful, noted author and food activist Michael Pollan has pointed out that Proposition 37 started a national conversation about food and food safety, gave the public an opportunity to vote about their confidence in the food industry, and made the public increasingly aware of lack of transparency within the food industry.47
Topic for Debate: To Label or Not to Label?
For this debate, you are the assigned to the role of owner of Just Food, a large (fictional) supermarket chain in the southwestern United States. A bill has just been tabled in your state’s House of Representatives to require mandatory labeling of all food products containing GMOs. Your major competitor, organic-loving Soul Foods, has come out publicly in support of this bill. Various lobby groups for both sides of the debate have approached you for support, and you must now decide whether you and your supermarket chain will take a public stand on the issue of GMO labeling.
The CEO of Just Food, Emily Progresso, is very mindful of the potential public relations benefits of coming out in favor of mandatory GMO labeling. On the other hand, Ms. Progresso has a degree in agricultural science and she is a very sincere person who does not want to take a position just for the sake of expediency; she would prefer to think she is doing the right thing. She asks two of her executives to prepare briefs for an internal debate about the topic.
Affirmative
Just Food should publicly support mandatory labeling of all products that contain GMOs.
Possible Arguments
• GMOs are not adequately researched and may be harmful for human consumption.
• Consumers have a right to know what they are purchasing for consumption.
• GMOs reduce plant biodiversity.
• Taking a stance against labeling will risk a consumer boycott or shift of consumer preferences to our competitor, Soul Foods.
Negative
Just Food should not publicly support mandatory labeling of all products that contain GMOs.
Possible Arguments
• GM foods are as nutritious as, or even more nutritious than, conventional foods.
• GMO use reduces a number of environmental problems.
• Genetic modification occurs naturally.
• Unnecessary labeling creates consumer fear and suspicion.
Readings
4.1 Food Safety Fact Sheet: Genetically Engineered Food: The Labeling Debate
Center for Food Safety. “Genetically Engineered Food: The Labeling Debate.” Food Safety Fact Sheet. April 2013. http://www.centerforfoodsafety.org/fact-sheets/1370/genetically-engineered-food-the-labeling-debate#.
If you want to know if your food was irradiated or contains gluten, aspartame, high fructose corn syrup, transfats or MSG, you simply read the label. But if you want to know if your food was genetic engineered, you’re not going to find any information on the package.
Why? Because despite the fact that 64 countries around the world (including all European Union member states, Japan, Australia, Brazil, Russia, and China1) grant their citizens the right to know what is in their food, the United States continues to ignore consumer demands to label GE foods. Numerous polls2 have indicated that more than 90 percent of US consumers believe GE foods should be labeled, yet the US has refused to grant its citizens this basic right.
Unlabeled, Untested, and You’re Eating It
Consumers across the country are being allowed to purchase and consume unlabeled GE foods, without our knowledge or consent. Already, this novel technology has invaded our grocery stores and our kitchens by fundamentally altering some of our most important staple food crops. Currently, more than 88 percent of US corn is genetically engineered, as are 93 percent of soybeans and 94 percent of cotton3 (cottonseed oil is often used in food products). According to industry estimates, up to 95 percent of sugar beets may now be GE varieties. It has been estimated that upwards of 75 percent of processed foods on supermarket shelves—from soda to soup, crackers to condiments—contain genetically engineered ingredients.
The United Nations, the World Health Organization, and the American Medical Association have all called for mandatory safety testing of GE foods. Nonetheless, FDA does no independent testing of their safety, even though documents uncovered in CFS litigation show that scientists within FDA indicated that GE foods could pose serious risks…
The State of GE Food Labeling
…Just over twenty years ago, FDA decided that GE foods need not be labeled because they were not “materially” different from other foods.
The biotech industry has also fiercely opposed GE labeling, and has convinced many in Congress and FDA that such a label would “mislead” consumers into thinking the food is dangerous. But we don’t label dangerous foods; we take them off the market. The government mandates food labeling not based on safety, but upon “material” change that consumers should be informed about. In fact, the agency already requires labels for over 3,000 ingredients, additives, and processes in food production, for all kinds of reasons, none of which are because the food has been deemed dangerous…
State and Federal Labeling Initiatives
As concerned citizens across the country grow tired of waiting for the federal government to take action, they are turning to state and local governments. In 2013 alone, over half the states in the country introduced bills that would require labeling for GE foods.4 Many of these bills use language that CFS crafted, or are based on CFS’s model GE labeling bill. On the heels of the narrow defeat of California’s landmark Proposition 37, states from Washington to Vermont are debating state legislation and citizen driven ballot initiatives to do what the federal government won’t: label GE food…
Interested parties seeking counsel on getting an initiative started in your city or state should contact CFS at [email protected].
Center for Food Safety. “Genetically Engineered Food: The Labeling Debate.” Food Safety Fact Sheet. April 2013. http://www.centerforfoodsafety.org/f...beling-debate#
4.2 “Why Genetically Modified Foods Should Be Labeled”
Bartolotto, Carole. “Why Genetically Modified Foods Should be Labeled,” HuffPost: Food for Thought. December 4, 2013. http://www.huffingtonpost.com/carole-bartolotto/why-genetically-modified-food_b_4039114.html.
Did you know that you have been enrolled in the largest research study ever conducted in the United States but you never signed a consent form or agreed to participate? That’s because since 1996 you—and basically everyone you know—have been eating genetically modified foods…
Most soybeans, corn, canola, cotton, sugar beets, and Hawaiian papaya, and some zucchini, yellow squash, and alfalfa are genetically modified. Products such as oil, high fructose corn syrup, and sugar are created from these crops and added to processed foods. This explains why nearly 80 percent of processed and most fast foods contain GMOs.
The question is are GMOs safe for us and the environment? Actually, the answers are not clear. There are no long-term studies demonstrating that GMOs are safe for humans and the Food and Drug Administration (FDA) does not do its own safety testing of GMOs…
The environment is another issue. What are the implications when a genetically modified plant crossbreeds with other plants? The monarch butterflies are declining due to the destruction of milkweed. What other consequences are possible? Super bugs and super weeds are already showing up…
The bottom line is that we have a product in our food supply with unknown health and environmental implications. At the very least, we should have these foods labeled. However, try as we might, we cannot make that happen in the U.S. Even though 9 out of 10 people want them labeled, the biotech companies and food manufacturers do not… Over 60 countries, including China, label GMOs and some countries ban them. Why can’t we have transparency in our food supply?
Washington’s Initiative 522 to label genetically engineered foods, on the November [2013] ballot, will help us get the transparency we desire. But companies such as Monsanto, Dupont Pioneer, Bayer CropScience, Dow Agrosciences, and the Grocery Manufacturers Association (a trade group) will pay millions to create misleading and factually incorrect ads telling Washingtonites that labeling will cost money, hurt farmers, and isn’t necessary because GMOs are safe. However, we know if a food has high fructose corn syrup or trans fat, or is irradiated. Why can’t we know if it’s genetically engineered? The biggest fear of these companies is that once GMOs are labeled, we won’t want to eat them anymore. And that may happen, just like it did when we found out there was pink slime in our hamburgers!
4.3 Monsanto’s Position
Monsanto. “Labeling Food and Ingredients Developed from GM Seed.” Monsanto.com. www.monsanto.com/newsviews/pages/food-labeling.aspx (accessed November 30, 2014).
At-a-Glance: Our View on Food Labeling
The safety of our products is our first priority, and multiple health societies, hundreds of independent scientific experts, and dozens of governments around the world have determined that foods and ingredients developed through biotechnology [or genetic modification (GM)] are safe.
Each country establishes its own food labeling laws. Within the United States, the government has established clear guidance with respect to labeling food products containing GM ingredients; we support this approach. We also support food companies’ choices to voluntarily label food products noting certain attributes (e.g., organic) based on their customers’ preferences and provided the labeling is truthful and not misleading.
We oppose current initiatives to mandate labeling of ingredients developed from GM seeds in the absence of any demonstrated risks. Such mandatory labeling could imply that food products containing these ingredients are somehow inferior to their conventional or organic counterparts.
Viewpoints on Labeling GM Foods and Ingredients in the United States
…Within the United States, the Food and Drug Administration (FDA) oversees food labeling. FDA guidance requires labeling of food products containing ingredients from GM seed if there is a meaningful difference between that food and its conventional counterpart. The American Medical Association (AMA) supports FDA’s approach and approved a formal statement asserting that there is no scientific justification for special labeling of foods containing GM ingredients.
…FDA allows food manufacturers the choice to voluntarily label their products noting certain attributes or production methods (e.g., organic) provided the label is truthful and not misleading. We support this approach. Food companies are in the best position to determine what type of information meets the needs and desires of their customers.
Monsanto website, accessed November 30, 2014, www.monsanto.com.
4.4 “Why We Shouldn’t Label (or Worry about) Genetically Modified Products”
English, Cameron. “GMO Foods: Why We Shouldn’t Label (or Worry about) Genetically Modified Products.” PolicyMic. March 9, 2012. http://mic.com/articles/5226/gmo-foods-why-we-shouldn-t-label-or-worry-about-genetically-modified-products.
Last year, 14 states attempted to pass legislation requiring that genetically modified (GMO) foods be labeled as such. And I learned this week that California is now following in their footsteps to become number 15. The petition in my home state is being sold with the tagline “It’s our right to know” what we’re eating, and ominous suggestions about the health risks associated with eating GMO foods.
Appealing to voters’ “rights” and stirring up health concerns are guaranteed ways to bring attention to political causes, but in the case of GMO food labeling, both tactics are fallacious. There is no reason to label these generally harmless foods and doing so could create unnecessary concern among the public…
The idea of food laden with foreign genes may sound scary, but it really isn’t. Since we don’t live in a sterile environment, all the plants we eat, genetically modified or not, are loaded with bacteria, viruses, and other living organisms— and their DNA. According to agricultural scientist Steve Savage, this fact shouldn’t concern us. “Even though we are eating microbes, their genes, and their gene products on a grand scale, it is almost never a problem. In fact, some of these microbes go on to become part of our own bank of bacteria, etc., that live within our digestive system—often to our benefit.”
Savage goes on to point out that the only difference between the foreign genetic materials found naturally in plants and the genes we intentionally add to them is that we know more about the latter. “We know the exact sequence of the gene, its location in the plant’s chromosomes, what the gene does,” Savage says. The result is that we can more easily determine how safe GMO foods are for consumption, compared to their natural counterparts.
But, that’s not the only good thing about GMO foods. Genetic engineering has allowed scientists to develop crops that consume less water, grow in harsh environments, and produce less carbon dioxide, as molecular biologist Henry Miller points out. Put another way, these technological advances have made it possible to produce cheaper food in greater quantities and in a more sustainable fashion. Food security and environmental protection are political causes typically championed by progressives. So why are these same people pushing for GMO food labeling?
…Most importantly, science education doesn’t come from food packaging. There’s simply no way to properly educate consumers about the foods they’re eating at the point of sale. That requires a concerted effort on the part of scientists and educators (which is already underway), and a desire to learn on the part of consumers. There’s no reason to begin that process by feeding people misleading information during their weekly grocery runs.
Of course, that last sentence assumes that supporters of food labeling petitions are interested in educating people about nutrition, which they aren’t. The environmentalists and public health advocates behind these measures are trying to force their preferences on the public through the initiative process. If you think that’s just the ranting of an idealistic libertarian, considering that prominent scientists and science writers have been saying the same thing for many years.
If for no other reason, the opinion of experts ought to be enough to put a stop to exaggerated fears of genetic engineering and baseless food labeling campaigns.
Synthesis Questions
1. What impact will labeling of GM food products have on producers and developers of GMO foods?
2. What impact will labeling of GM food products have on research of GMOs?
3. What impact will labeling of GM food have on consumers?
4. What would be the most effective and efficient system for labeling GM food?
Endnotes
1. World Health Organization, 20 Questions on Genetically Modified Foods, accessed October 4, 2013, www.who.int/foodsafety/publications/biotech/20questions/en/.
2. Nancy Harris, ed., “Introduction,” in Genetically Engineered Foods (San Diego: Greenhaven, 2004), 3-9.
3. J. S. Coker, “Crossing the Species Boundary: Genetic Engineering as Conscious Evolution,” Futurist, 46, no. 1 (2012), 23–27.
4. Ibid., p. 23.
5. World Health Organization, 20 Questions.
6. Food and Water Watch, “The Case for GE Labeling,” Fact Sheet, May 2012, documents.foodandwaterwatch.org/doc/CaseForGELabeling.pdf.
7. Foresight. “The Future of Food and Farming: Final Project Report (London: The Government Office for Science, 2011).
8. Coker, “Crossing the Species Boundary.”
9. Shelley Mika, “Britons Show Distaste for Biotech Foods: Americans More Optimistic about GM Food Safety,” Gallup, Inc., October 18, 2005, www.gallup.com/poll/19261/Britons-Show-Distaste-Biotech-Foods.aspx.
10. Michael Antoniou, Claire Robinson, and John Fagan, GMO Myths and Truths: An Evidence-Based Examination of the Claims Made for the Safety and Efficacy of Genetically Modified Crops, (London: Earth Open Source, 2012).
11. Josh Schonwald, The Taste of Tomorrow (New York: Harper, 2012).
12. Schonwald, The Taste of Tomorrow.
13. Antoniou, GMO Myths and Truths.
14. R. Cummins, “Hazards of Genetically Engineered Foods and Crops: Why We Need a Global Moratorium,” in R. Sherlock and J. Morrey, eds., Ethical Issues in Biotechnology (Lanham, MD: Rowman & Littlefield Publishers, Inc., 2002), 213–219.
15. J.E. Carpenter, “Impact of GE Crops on Biodiversity,” GM Crops, 2, no. 1 (2011), 7–23, doi:10.4161/gmcr.2.1.15086.
16. Ibid., p. 7.
17. D. Gertsberg, “Loss of Biodiversity and Genetically Modified Crops,” GMO Journal: Food Safety Politics, June 17, 2011, http://gmo-journal.com/2011/06/17/loss-of-biodiversity-and-genetically-modified-crops/.
18. Janet E. Carpenter, “Impact of GM Crops on Biodiversity,” GM Crops 2(1) (2011), 1-17.
19. R. Cummins, “Hazards of GE foods and crops.”
20. Schonwald, The Taste of Tomorrow.
21. Soil Association, Feeding the Future: How Organic Farming Can Help Feed the World (Bristol, UK: Soil Association, 2012).
22. American Association for the Advancement of Science, “Statement by the AAAS Board of Directors on Labeling of Genetically Modified Foods,” news release, June 12, 2013, http://www.aaas.org/news/statement-aaas-board-directors-labeling-genetically-modified-foods .
23.G. Conko and H. Miller, “The Rush to Condemn Genetically Modified Crops,” Policy Review, 165 (2011), 69–82, http://www.hoover.org/publications/policy-review/article/64231.
24. Henry I. Miller, “Genetically Modified Foods Have Numerous Benefits and No Known Risks,” Genetic Engineering, Ed. Noël Merino. (Detroit: Greenhaven Press, 2013), Rpt. from “When Technophobia Becomes Toxic,” 2012, “Opposing Viewpoints in Context,” accessed 30 Nov. 2014, ic.galegroup.com/ic/ovic/ViewpointsDetailsPage/ViewpointsDetailsWindow?query=&prodId=OVIC&contentModules=&dviSelectedPage=&displayGroupName=Viewpoints&limiter=&disableHighlighting=&displayGroups=&sortBy=&search_within_results=&zid=&p=OVIC&action=2&catId=&activityType=&documentId=GALE%7CEJ3010138297&source=Bookmark&u=va_s_012_0440&jsid=affc771a8176de234bb909daa12bc91c.
25. Ibid.
26. Ibid.
27. G. Conko and H. Miller, “The Rush to Condemn.”
28. G. Séralini, et al., “Long-Term Toxicity of a Roundup Herbicide and a Roundup-Tolerant Genetically Modified Maize,” Food and Chemical Toxicology, 50 (2012), 4221–4231.
29. Steven Novella. “The Seralini GMO Study: Retraction and Response to Critics,” Science-Based Medicine, December 4, 2013, www.sciencebasedmedicine.org/the-seralini-gmo-study-retraction-and-response-to-critics/.
30. J. M. Smith, “GMO Toxins in Women and Fetuses,” AMASS Magazine, 41 (April 1, 2011), 12–14.
31. R. Cummins, “Hazards of GE foods and crops.”
32. United States Government Accountability Office, Genetically Engineered Crops: Agencies Are Proposing Changes to Improve Oversight, but Could Take Additional Steps to Enhance Coordination and Monitoring (Washington DC: United States Government Accountability Office, 2008).
33. Food and Water Watch, “The Case for GE Labeling,”
34. Ibid.
35. The Mellman Group, memorandum to Just Label It!, “Voters Overwhelmingly Support a Labeling Requirement for GE Foods,” March 22, 2011, http://justlabelit.org/wp-content/uploads/2012/01/Mellman-Survey-Results.pdf.
36. World Health Organization, 20 Questions.
37. M. Valletta, “Consumer perception and GMOs in the European Union,” in Policy Responses to Societal Concerns in Food and Agriculture: Proceedings of an OECD Workshop (Paris: Organisation for Economic Co-operation and Development, 2010), 87–93.
38. Guillaume Gruère, “Labeling Policies of Genetically Modified Food: Lessons from an International Review of Existing Approaches,” Brief Number 7, 2007, http://www.cbd.int/doc/external/mop-04/ifpri-pbs-policy-07-en.pdf.
39. Michael Pollan, “Vote for the Dinner Party,” New York Times Magazine, October 10, 2012, http://www.nytimes.com/2012/10/14/magazine/why-californias-proposition-37-should-matter-to-anyone-who-cares-about-food.html?pagewanted=all.
40. J. Hewitt, (2010). “GMO Policy in Australia,” Policy Responses to Societal Concerns in Food and Agriculture: Proceedings of an OECD Workshop (Paris: Organisation for Economic Co-operation and Development, 2010), 95–97.
41. A. de Leon, A. Manalo, and F. C. Guilatco, “The Cost Implications of GM Food Labeling in the Philippines,” Crop Biotech Brief, IV, no. 2 (2004), www.isaaa.org/kc/Publications/pdfs/briefs/Brief4-2.pdf
42. United States Government Accountability Office, Genetically Engineered Crops.
43. United States Government Accountability Office, Genetically Engineered Crops.
44. Center for Food Safety, “State Labeling Initiatives,” accessed November 30, 2014, http://www.centerforfoodsafety.org/issues/976/ge-food-labeling/state-labeling-initiatives,
45. Center for Food Safety, “State Labeling Initiatives.”
46. Anna Almendrala, “Prop 37 Rejected: California Voters Reject Anti-GMO Labeling,” The Huffington Post, last updated November 8, 2012, http://www.huffingtonpost.com/2012/11/07/prop-37-defeated-californ_n_2088402.html.
47. Almendrala, “Prop 37 Rejected.”
1 Center for Food Safety, Genetically Engineered Food Labeling Laws Map, http://www.centerforfoodsafety.org/ge-map
2 Center for Food Safety, U.S. Polls on GE Food Labeling, http://www.centerforfoodsafety.org/i...-food-labeling
3 Jorge Fernandez-Cornejo, Genetically engineered varieties of corn, upland cotton, and soybeans, by State and for the United States, 2000-12, Washington, D.C.: USDA National Agricultural Statistics Service, 2012. http://www.ers.usda.gov/data-product...x#.UUn-Fhc4tiM
4 Center for Food Safety, State Labeling Initiatives, http://www.centerforfoodsafety.org/i...ng-initiatives | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/01%3A_Chapters/1.04%3A_Genetically_Modified_Organisms_%28GMOs%29.txt |
Kate Ter Haar (CC-BY 2.0, 2011) Figure 5.1 The proud owners of TOMS Shoes are often willing to help promote the brand.
Introduction
While there is no universally accepted definition of social entrepreneur, the term is typically applied to an individual who uses market-based ideas and practices to create “social value,” the enhanced well-being of individuals, communities, and the environment. Unlike ordinary business entrepreneurs who base their decisions solely on financial returns, social entrepreneurs incorporate the objective of creating social value into their founding business models. Social entrepreneurship has become exceedingly popular in recent years and a number of prestigious business schools have created specific academic programs in the field. It is often said that social entrepreneurs are changing the world. They are lauded for their ability to effect far-reaching social change through innovative solutions that disrupt existing patterns of production, distribution, and consumption. Prominent social entrepreneurs are celebrated on magazine covers, praised at the World Economic Forum in Davos, and awarded millions of dollars in seed money from “angel” investors, and and applauded as “harbingers of new ways of doing business.”1 Social entrepreneurs are thus often hailed as heroes—but are they actually affecting positive social change?
Undeniably, social entrepreneurship can arouse a striking level of enthusiasm among consumers. Blake Mycoskie, social entrepreneur and founder of TOMS Shoes, tells the story of a young woman who accosted him in an airport, pointing at her pair of TOMS while yelling, “This is the most amazing company in the world!”2 Founded in 2006, TOMS Shoes immediately attracted a devoted following with its innovative use of the so-called One for One business model, in which each purchase of a pair of shoes by a consumer triggers the gift of a free pair of shoes to an impoverished child in a developing country.
The enthusiasm associated with social entrepreneurship is perhaps emblematic of increased global social awareness, which is evidenced by increased charitable giving worldwide. A 2012 study showed that 83% of Americans wish brands would support causes; 41% have bought a product because it was associated with a cause (a figure that has doubled since 1993); 94% said that given same price and quality, they were likely to switch brands to one that represented a cause; and more than 90% think companies should consider giving in the communities in which they do business.
Despite the eager reception from consumers, critics of social entrepreneurship have raised concerns about the creation of social value in a for-profit context. Thus, TOMS is sometimes mistaken for a charity because it donates shoes to children in developing countries, yet it is also in business to sell shoes. The company earns an estimated \$300 million a year and has made Mr. Mycoskie a wealthy man. While companies are starting to look more like charities, nonprofits are also increasingly relying on business principles to survive an uncertain economy in which donors expect to see tangible results from their charitable contributions.
Our understanding of social entrepreneurship is complicated by the absence of any consensus on ways to measure social outcomes. As a result, there is little concrete statistical data available on the impact of social entrepreneurship. Indeed, there is not much agreement on a precise definition of social entrepreneurship, so it becomes difficult to say to what extent any given company is an example of social entrepreneurship. TOMS’ Chief Giving Officer, Sebastian Fries, recently told the New York Times that the company is “not in the business of poverty alleviation.”3 Does this mean that increased social value is merely a happy externality of the business of selling shoes? If so, what makes Blake Mycoskie a social entrepreneur?
Some critics go so far as to suggest that social entrepreneurs are merely using public relations tactics to engage in social or environmental greenwashing—taking advantage of consumers’ desire to do good. In some cases, it has been argued, social entrepreneurs can even do more harm than good (as we will see, this criticism has even been leveled at TOMS). Lacking a full understanding of the socioeconomic and cultural dynamic of the developing countries in which they intervene, social enterprises can undermine fragile local markets and foster dependence on foreign assistance.
In our chapter-ending debate, we will put ourselves in the position of a startup company that is inspired by the example of TOMS Shoes. The company is considering adopting a one-for-one model and you will be asked whether it should. To arrive at an informed answer to this question, we must first address two related questions: (1) Do social entrepreneurs create social value to the same degree as a traditional nonprofit or charity? (2) Does the blurring of distinctions between charity and business dupe consumers into believing that consumption equals caring? Given the mixture of enthusiasm and ambivalence aroused by social entrepreneurship, our first task is to understand it.
The Growth of Social Entrepreneurship
In 1974, a Bangladeshi economics professor named Muhammad Yunus visited a small rural village in Bangladesh in an effort to connect the economic theories he was teaching with the reality of poverty in his native country. Amidst the tragedy of rural poverty, Yunus believed he saw an opportunity to transform perceptions of poverty relief. Yunus felt that, although rural people were skilled and hardworking, they were unable to obtain loans from banks primarily due to a lack of collateral. Yunus’s innovation was to seek to alleviate poverty directly by establishing a bank for the poor. This bank would make microloans (very small loans, often less than \$100) with low interest rates to enable small entrepreneurs to slowly build up their capital to reinvest, grow their businesses, and rise from poverty.
Yunus was able to launch this idea in 1976 in the form of Grameen Bank, which began operations by making a small number of loans to members of a local village. The business grew quickly, with an extraordinarily high loan repayment rate of 99%. The explosion of cellular access served as a catalyst for the microfinance market. Through their mobile phones, rural entrepreneurs had access to a global network of investors and business tools, where traditionally they might have had to travel hundreds of miles to a city to borrow money or buy goods and services.
By 2005, the Grameen Bank had more than 1,500 branches in nearly 50,000 villages, covering about 70% of India, with approximately five million borrowers and annual revenues of about \$80 million. The success of the Grameen experiment fostered the modern microfinance industry, which connects thousands of entrepreneurs to donors all over the world, through sites like Kiva, GiveDirectly, Accion USA, and the Grameen Foundation. In 2006, Yunus won the Nobel Peace Prize, which recognized him as a pioneer in microfinance. The social entrepreneurship revolution was underway.
While Yunus focused on microfinance, other thinkers and social activists developed alternative methods for using entrepreneurial techniques to foster social change. In 1981, Bill Drayton, a former EPA administrator and management consultant, formed Ashoka, the first organization specifically devoted to promoting and supporting social entrepreneurs. Ashoka invests in promising social entrepreneurs, providing them with start-up financing, professional support services, and connections to a global network of business and social sector players. Today, Ashoka funds nearly 3,000 Fellows in 70 countries.
Since Ashoka was launched, scores of other organizations all over the world have formed to support social entrepreneurship. According to a 2012 study,4 there are more than 60 national or international social entrepreneur networks worldwide, with an average of four to five new networks being set up every year.5
Governments have hopped aboard the social entrepreneurship bandwagon. In 2011, the European Union established social entrepreneurship as one of the 12 pillars of its policy for growth and social progress. France appointed a Minister for Social and Cooperative Economy, and in 2012, the European Commission launched a call for proposals to produce and collect statistics on social entrepreneurship in the EU, under the Initiative for Social Entrepreneurship.
In the United States, new legal corporate forms have emerged that allow for the inclusion of social value objectives in a company’s articles of incorporation. In 15 states, companies can legally incorporate as a benefit corporation (B Corp), a new class of corporation that by definition must (1) create a materially positive impact on society and the environment; (2) expand fiduciary duty to require consideration of non-financial interests when making decisions; and (3) report on its overall social and environmental performance using recognized third-party standards. B Corps allow directors and officers to consider non-financial decisions in reporting to multiple stakeholders. Today, there are more than 520 certified B Corps across 60 different industries representing \$3 billion in revenues. Patagonia was the first company to take advantage of the new law, officially becoming a B Corp in California in 2012.
Similar to the B Corp is the flexible purpose corporation (FPC), a designation that allows a corporation to select at least one specific mission to pursue in addition to profit-making. A low-profit limited liability company (L3C) is a for-profit social enterprise that has a stated goal of performing a socially beneficial purpose rather than maximizing income. It is a hybrid structure that combines the legal and tax flexibility of a traditional limited liability corporation (LLC) with the social benefits of a nonprofit organization, and the branding and market positioning advantages of a social enterprise. The L3C is designed to make it easier for socially oriented businesses to attract investments from foundations and private investors.
Some social entrepreneurs have sought to enhance their fundraising capacity by creating a hybrid model—a commercial enterprise linked to a nonprofit subsidiary, or vice versa. The nonprofit side is tax exempt and can apply for grants and accept donations, while the for-profit side can enlist investors and leverage debt.
An example of this form is Mozilla, the company that makes the web browser Firefox. In response to the explosive growth of Firefox, the nonprofit Mozilla Foundation formed a for-profit subsidiary in 2005, the Mozilla Corporation. The for-profit makes about \$104 million a year from revenue sharing agreements with search partners such as Google and Yahoo. Meanwhile, the Mozilla Foundation, which is the corporation’s sole shareholder, handles the development of open-source software and brings in just over \$222,000 in charitable donations per year.
Social Entrepreneurship and Global Philanthropy
Is social entrepreneurship a form of philanthropy? Given that both concepts are rooted in the creation of positive social value, it makes sense to consider the strong relationship between the two fields. Indeed, policy makers have cited social entrepreneurship as a powerful ally for philanthropy, and perhaps even as its successor. Increasingly, many donors see themselves as investors rather than as providers of charity. Such donors, who have been dubbed “philanthro-capitalists,” expect measurable social returns on their investments. They tend to view the for-profit social enterprise model as an efficient, innovative, and scalable method of creating social value in markets where nonprofits and governments have seemingly failed.
Bill Gates, former Microsoft CEO and one of the world’s wealthiest individuals, has attained leadership status in the global philanthropic community as the head of the world’s largest charitable institution, the Gates Foundation. At the World Economic Forum in 2008, Gates called for a new form of “creative capitalism,” which “matches business expertise with needs in the developing world to find markets that are already there, but are untapped.” Gates pointed out that “sometimes market forces fail to make an impact in developing countries not because there’s no demand, or even because money is lacking, but because we don’t spend enough time studying the needs and requirements of that market.”6
Gates cited economist C.K. Prahalad’s bottom of the pyramid (BoP) approach to eradicating poverty, which postulates that the billions of people in the world who live on less than \$2 a day represent the “unserved and underserved.” Prahalad argues that collectively the BoP has immense buying power. By selling products and services to this segment, companies both profit and serve the needs of the poor. The Gates/Prahalad approach was seconded in a 2011 speech by World Bank President Robert Zoellick, who postulated that the time had come to move “beyond aid” to a system in which “assistance would be integrated with—and connected to—global growth strategies, fundamentally driven by private investment and entrepreneurship. The goal would not be charity, but a mutual interest in building more poles of growth.”7
Zoellick called for entrepreneurship and innovation to create expanded markets, acknowledging that “new players and new donors are already transforming the aid world as we know it.” This new multilateral system would be rooted in “a notion of stakeholder responsibility, more connected to private sector and civil society networks, more committed to practical problem solving and innovation.”
The call by Gates and Zoellick to develop new forms of private entrepreneurial support for global aid reflects the reality that the private sector has become a much bigger factor than government aid in international development. In 2010, global private philanthropy totaled \$575 billion. U.S. giving from foundations, corporations, private and voluntary organizations (PVOs),8 individual volunteers, religious organizations, and academic institutions totaled \$39 billion. Corporations and private and voluntary organizations (PVOs) accounted for the largest portion of U.S. philanthropy, making up more than half the total.9
While these figures offer a fair estimate of philanthropic activity worldwide, they likely under-report the total amount of money donated to developing nations each year. Financial reporting is typically done voluntarily by PVOs, corporations, foundations, and religious groups in developing countries. In the United States, organizations with less than \$5,000 in annual revenue are not required to register with the IRS. The Urban Institute estimates that, of the approximately 1.1 million public charities in the United States, only 366,000 report data to the IRS each year.10
Social Value: Measuring the Impact of Entrepreneurship and Philanthropy
While it is clear that global philanthropic activity is generally increasing, measurement of its impact on social value and aid effectiveness has only recently become a priority. Increased demands for transparency and accountability from donors and governments have resulted in hundreds of competing methods of measuring social value. Foreign aid is predominantly measured in terms of total capital investment, not by how many people are actually helped. Historically, reports of aid effectiveness have frequently consisted of unreliable individual anecdotes and testimonials.
Without accurate financial and impact data, it is difficult to tell exactly where donor dollars are going. This information is unfortunately quite complicated and costly to acquire. Not only must the concepts of benefit or value be quantified, but external factors affecting research validity must be ruled out. While many donors demand to know how their money is spent, most of them do not like the idea of paying for the administrative costs associated with producing such statistics. Most aid organizations want to see their money going toward groundwork, not paperwork.
The Organization for Economic Cooperation and Development (OECD) is the main international body that collects and evaluates data on aid effectiveness. A coalition of 34 countries dedicated to stimulating world economic growth and international trade, the OECD, through its Development Assistance Committee (DAC), coordinates agreements between donor countries, developing nations, and private interests to help developing country governments. Based on “trade, not aid” principles, the DAC is ultimately geared toward improving local systems so that developing countries are able to manage economic growth without depending on foreign aid. Much of the DAC’s data suggests that aid works best when it is properly directed and managed. By some estimates, it costs a nonprofit an average of \$33 to raise \$100 in the United States and up to 80% of a nonprofit’s time and energy is devoted to raising funds.
Social return on investment (SROI) is one method of impact measurement that has been gaining in popularity. SROI is basically a cost–benefit analysis that measures non-financial (social and/or environmental) value created relative to resources invested. This approach is sometimes accused of being simplistic: While “hard outcomes,” such as the number of children passing a literacy test, can be easily measured, “soft outcomes,” such as increased happiness, self-confidence, or communication skills, cannot be measured and weighed against dollar amounts. While SROI is usually applied to charities and NGOs, many believe that the method works best when applied to for-profit businesses, such as those created by social entrepreneurs. Proponents of SROI point out that it forces organizations to have meaningful discussions with their stakeholders.
Much of the impetus for improved measurement is driven by a widespread frustration with the perceived ineffectiveness of foreign aid. According to the World Bank, many forms of aid are ill-conceived and do not make optimal use of resources.11 Studies on the impact of development aid in the form of in-kind donations, or gifts of materials or goods rather than money, suggest that, while potentially benefiting recipients in the short term, in-kind donations have a negative impact on local markets in the long term. Thus, Oxfam International has argued that, while much foreign food aid helps to save lives in the immediate aftermath of natural disasters and conflict, in-kind food donations have often been a way for donor countries to dump their surplus production and promote exports.12 For example, in the aftermath of the 2010 Haiti earthquake, an influx of rice donations hurt local rice farmers’ livelihoods and threatened the local agricultural economy.13 A 2008 study from the University of Toronto compared in-kind clothing donations with food aid, stating that used clothing imports have a negative impact on apparel and textile production in Africa, resulting in a roughly 40% decline in African apparel production and a 50% decline in apparel employment.14
The Dark Side of Social Entrepreneurship
Critics of social entrepreneurship draw attention to its potential to encourage corporate and consumer hypocrisy. Social philosopher Slavoj Zizek observes that adherents of “conscious consumerism” often state that they are trying to address problems such as poverty, inequality, and environmental degradation, which are the principal negative externalities of a capitalist economy. However, in Zizek’s view, it is an obvious self-contradiction to think that one can overcome the defects of capitalism by engaging in yet more capitalism. TOMS shoes, for example, are manufactured by poor people in overseas factories. When their famously flimsy design wears out, they are discarded into landfills.
There is evidence that conscious consumerism can generate surprisingly counterintuitive effects. A study released by the University of Toronto in 2010 found a negative connection between altruism and ethical behavior.15 Student volunteers were divided into groups and instructed to look at two online stores: one that offered mostly green products and another that carried mostly conventional products. Half the students in each group were asked to purchase products, and half were asked to simply rate them. Afterward, in a money-sharing game, the students who only rated the green products shared the most money, while the students who purchased green products shared the least. Furthermore, in a computer game that tempted the students to cheat, those who had purchased green products were not only more likely to cheat than the other groups, but they took extra money when asked to pay themselves from envelopes on their desks.
The researchers concluded that mere exposure to green products (experienced as an ethical act) encourages prosocial behavior, while engaging in ethical purchasing may decrease the likelihood of future ethical behavior. It appears that people may have a limited amount of ethical motivation, which can be used up. This tendency is referred to as the single-action bias and has been confirmed as a potential drain on charitable giving. A University of Michigan study found that if two consumers are given a chance to purchase the same product but one of them buys the product as a “cause-related” purchase, that consumer’s charitable giving will be lower than the other’s.16
Critics of social entrepreneurship also cite the so-called halo effect, a cognitive bias in which we assume that because someone is good in one area, they will be good in other areas. The phrase was coined by psychologist Edward Thorndike in 1920 to describe the way commanding officers rated their soldiers as either good or bad across the board. Arguably, when consumers see a company as having a positive social impact via social entrepreneurship, we assume that it is ethical across the board, which may not be the case.
Case Study: TOMS Shoes
In 2006, Blake Mycoskie, a young entrepreneur from Arlington, Texas, started a shoe company with a simple premise: For every pair of shoes sold, the company would donate a similar pair to a child in need. Mycoskie, self-described Chief Shoe Giver of TOMS Shoes, is considered the pioneer of the one-for-one giving model, which has since been imitated by companies making everything from hospital scrubs to chewing gum.
Mycoskie claims that with TOMS he has created not just a business but a social movement that has fundamentally changed the way we consume products. He has trademarked the tagline, “One for One,” and plans to expand the model into many more product categories, a move that supports his view of giving as an across-the-board lifestyle choice. It’s also Core Value #8, according to an inspirational sign in the TOMS office space: “Giving is what fuels us. Giving is our future.”
Mycoskie was vacationing in Argentina when he got the idea for TOMS (the name is a play on the phrase “Shoes for Tomorrow”). After meeting charity workers who were collecting used shoes to distribute to poor children in the local villages, he was struck by the fact that so many children go barefoot in the developing world, and resolved to find a more sustainable alternative to straightforward donation. In his 2011 book, Start Something That Matters, Mycoskie reflects on his thought process: “Why not create a for-profit business to help provide shoes for these children? Why not come up with a solution that guaranteed a constant flow of shoes, rather than being dependent on kind people making donations? In other words, maybe the solution was in entrepreneurship, not charity.”17
Mycoskie’s business model proved remarkably successful. TOMS experienced phenomenal growth in market penetration and consumer loyalty in a very short period of time. By 2013 the company had over 2 million social media followers and had given away more than 10 million pairs of new shoes to children in over 60 countries.
Production
The majority of TOMS shoes are produced in China in order to keep manufacturing costs down, but a small number of the Giving Shoes are produced in Ethiopia, Kenya, and Argentina, where they can be distributed cheaply using local supply partners. The company plans to add shoe manufacturing in India and Haiti. By producing shoes in regions where they’re donated, TOMS lowers its distribution costs. In the case of Ethiopia and Kenya, the company benefits from the open borders of the African Free Trade Zone.
The company has also suggested that it is evaluating approaches to increasing employment in “Giving” regions, while offering existing workers more benefits, such as higher wages, childcare, and financial education. “Within two years, we will produce one-third of our Giving Shoes in the regions where we give them. By producing more shoes locally, we will create and support jobs in places where they are needed. We are testing production in India and are looking to expand manufacturing in Africa and other regions.”18
Although TOMS does not own any factories, it has a strict code of conduct for its supply chain. The company assures its customers that supply, production, and labor comply with corporate responsibility standards and local laws, including the prevention of slavery and human trafficking.
Product Mix
Mycoskie started TOMS with just one product: the alpargata shoe, a simple design that was popular with Argentinean laborers in the late nineteenth century and became an important part of the Argentine national identity. The shoes are inexpensive and lightweight, with canvas or fabric uppers and synthetic rubber soles.
TOMS gradually began to add more designs and, by 2013, featured additional categories such as ballet flats, lace-up boots, wedges, kids’ shoes, wedge booties, and vegan shoes. The company regularly partners with celebrities, brands, and charities to create limited-edition collections; past collaborators have included Charlize Theron, Ben Affleck, Jonathan Adler, Sub Pop Records, The Row, the Movember Foundation, and the Haiti Artist Collective, a group of Haitian artists who customize Chinese-made TOMS for the U.S. market.
All of TOMS’s Giving Shoes are based on the original alpargata design, and usually come in black, red, or blue. A common criticism of the brand is that they do not always satisfy children’s basic environmental needs. The shoes have a very short lifespan in muddy, rough terrain, and do not offer insulation in colder climates. In response to these criticisms, TOMS is beginning to produce and distribute a winter boot in Afghanistan, India, Kyrgyzstan, Nepal, Pakistan, and Tajikistan.
In 2011, TOMS began selling sunglasses using the One for One model. Made in Italy, the \$135 sunglasses come in three basic styles and a variety of colors; each consumer purchase pays for prescription glasses, eye surgery, and other sight-related procedures in developing countries. The eyewear line shows promise of becoming as successful as TOMS footwear, even though the connection between “buy one” and “give one” is less clear. TOMS has not released any sales data on its sunglasses, but claimed that, as of 2013, it had helped to deliver eye care to more than 150,000 people in 13 countries.19 Upon launching the new product line, Mycoskie announced, “From this day forward, TOMS will no longer just be a shoe company, it will be a one-for-one company.”20
This strategy has allowed TOMS to position itself as a lifestyle brand that will eventually turn every purchase into a philanthropic opportunity. A search of the U.S. Trademark Electronic Search System (TESS) reveals that the company has also registered trademarks for numerous other product categories, including baby clothing, hats, pet accessories, water, coffee, tea, jewelry, and books (as of the publication date of this text, TOMS had already begun operations in the coffee sector).
Target Market
TOMS attracts a demographic of young men and women. These consumers tend to be creative, individualistic trendsetters who use multiple media and technology platforms; have progressive political, environmental, and social views; and prefer to shop at small, independent boutiques. In addition to perceived design and style, they are attracted to the emotional value of the buy-one-give-one model. They buy organic clothing, ask for charitable donations in lieu of gifts, and shop at farmers’ markets. Their choice to buy TOMS is both an aesthetic preference and a public statement about their socially responsible lifestyles.21
Locations and Distribution
TOMS shoes are sold at more than 500 stores nationwide and internationally, including Neiman Marcus, Bergdorf Goodman, Nordstrom, Urban Outfitters, Whole Foods Market, and many independent boutiques. The company is also experimenting with standalone locations. It opened its flagship store in Venice, California, in 2012 and plans to expand its retail presence in the future. Mycoskie included a cafe in the flagship store, and describes it as more of a community meeting place than a retail location.
TOMS distributes donated shoes in two ways—with traveling shoe drops involving volunteers, employees, and contest-winning consumers; and through partner organizations with significant on-the-ground resources. The strategic Giving Partners are usually nonprofit humanitarian organizations that choose where and how the shoes are dispensed, often integrating donations into health and education programs. In some places, the shoes are gifts for families who bring their children in for checkups or immunizations; in others, they are simply given away, as at the Zaatari refugee camp in Jordan, where over 115,000 displaced Syrians are living in a massive makeshift city.
As of 2013, TOMS collaborated with 75 Giving Partners in over 50 countries, including Bridge2Rwanda, World Vision, goods for good, Save the Children, the Cambodian Children’s Fund, Partners In Health, and the Seva Foundation.
Impact Studies
Critics have questioned whether or not TOMS is truly a social enterprise, or if it merely uses cause marketing as a way to differentiate the brand and drive revenues. The inspirational message is so effective, and the feeling of moral certitude among supporters is so strong, that most customers do not ask the company to provide any statistical proof of its social, environmental, or economic impact on the developing world. At a time when consumers are demanding increased transparency and accountability from MNEs (multinational enterprises) and NGOs (non-governmental organizations), TOMS has somehow managed to avoid criticism from this group for failing to measure its philanthropic efficiency or efficacy.
Journalists, academics, and aid workers have shown less restraint. In response to criticism from the media—from the New York Times to a Peace Corps volunteer’s blog—TOMS funded a two-year study at the University of San Francisco to measure the company’s effect on local economies in one of its Giving Areas. In August 2013, researchers released a report entitled, “Do In-Kind Transfers Damage Local Markets? The Case of TOMS Shoe Donations in El Salvador.” After studying 979 households in 22 communities, they concluded that there was “little evidence to support the hypothesis that donated shoes exhibit negative impacts on local shoe markets.” However, the report goes on to say, “El Salvador [is] in many ways an ideal context to test the impact of in-kind donations on local markets because, although there are many children that do not wear shoes out-of-doors, most children do indeed own a pair of shoes (ed. emphasis), providing greater scope for finding a negative impact on local markets than a context in which shoe ownership, and hence market purchases, are rare. Indeed there are many countries such as El Salvador, which are recipients of donated shoes and clothing, but where existing ownership of these goods is relatively widespread compared to developing countries with even lower income levels.”22 In effect, TOMS is arguing that it does not impact local shoe markets in El Salvador part because children there already own shoes, which raises the question of whether the donated shoes are actually necessary.
Topic for Debate: Follow the TOMS Model?
In this chapter’s debate section, you are asked to play the role of an executive at a company that is considering adopting the TOMS model.
Our fictional company, Swensen Bags, Inc., owns a leading brand of backpacks and handbags in the United States, based in Albany, New York. The owner, Joe Swensen, has decided that the company needs to adopt a more active CSR profile. Swensen has decided to allocate \$1 million over the next 5 years to support some sort of charitable or socially responsible activity. Swensen has asked his senior executives to develop proposals.
Swensen’s vice president for marketing, Alma Marlow, has proposed an idea that Joe is supporting: to create a subsidiary brand to be called Earth Bags, which would be made from recycled polyester and which would employ a one-for-one giving approach. For every bag purchased, a backpack would be given to a promising student in a developing country. Joe Swensen has always insisted on the highest quality for his bags and is fanatical about the life span of zippers. He is convinced that low-income people in developing countries probably have to settle for low-quality bags, which break easily, and make it difficult for students to transport their school supplies.
The role of devil’s advocate is taken on by Joe’s vice president for finance, Suzanne Rentof, who believes that the plan is impractical and that it would be simpler to give money to a promising charity. “How are we going to get these bags to the kids?” she asks, “We don’t have any overseas sales offices. So how much money are we going to spend flying someone around the world, transporting bags through customs? The kids would probably prefer the cash; they could buy their own bags. Besides, how many of our customers are going to buy an expensive backpack just so kids overseas can get a free one? It’s different with TOMS Shoes; most Americans have many pairs of shoes and they feel bad for a kid without shoes. But most people only have one backpack, and they probably don’t feel that sorry for someone who doesn’t have a good backpack. If we don’t sell any of these bags, how are we going to pay for sending them overseas?”
Swensen admits that Rentof makes some interesting points, but he still supports the idea. He organizes a meeting and assigns two executives to develop pro and con arguments for the idea of the one-for-one bag. In this case, as opposed to some of the others in this text, if you are arguing the negative side of the debate, do not limit yourself to pointing out flaws in Alma Martin’s idea of a one-for-one approach. Remember, Swensen is ready to commit \$1 million to some charitable enterprise. If you do not think the one-for-one approach is a good idea, give examples of projects that you feel would represent a better use of the money.
Affirmative
Swensen Bags should create a backpack line based on the one-for-one giving model pioneered by TOMS Shoes.
Possible Arguments
• It would be an inspiring and fun way for company employees to interact with schools in developing nations, which would foster understanding across class, culture, and community.
• The project would promote education, as many children in developing countries cannot afford good backpacks.
• It would inspire other entrepreneurs to follow the one-for-one model and find new ways to fight poverty, which is something we should support.
Negative
Swensen Bags should not create a backpack line based on the one-for-one model, but should instead adopt a different form on social project.
Possible Arguments
• Giving away free products does not address the underlying problems of poverty.
• Donations foster dependency on foreign aid, which is unsustainable.
• The one-for-one model gives consumers the feeling that they’ve “done enough,” instead of looking for ways they can really help.
• Donated products hurt local merchants who sell similar products.
Readings
5.1 “Shoes for Business: The Unintended Consequences of Doing Good”
Jain, Niharika S. “Shoes for Business: The Unintended Consequences of Doing Good.” The Harvard Crimson. April 27, 2011. http://www.thecrimson.com/article/2011/4/27/shoes-local-toms-pair/.
TOMS is well known for its one-for-one business model: For every pair of shoes it sells, the company donates a pair of shoes to a child in need. At first, I thought this sounded like a great way to leverage business to help communities. But a skeptical friend prodded me to think more carefully about the impact TOMS—and other companies with similar business models—are making. By giving free shoes to impoverished populations, she pointed out, TOMS competes with local businesses and takes away customers that might otherwise buy locally made shoes.
Apparently, this isn’t uncommon in philanthropy. Several acknowledged instances can be found where in-kind donations have disrupted local markets in developing countries. A 2008 study found that used-clothing imports to Africa explained 50 percent of the fall in employment in that sector from 1981–2000. After the Haiti earthquake, an influx of foreign food aid—particularly donations of rice—hurt rice farmers’ livelihoods. Oxfam has also found that secondhand clothing imports to nations like Senegal and Ghana have likely hurt local industries and contributed to unemployment. The Oxfam report quotes the General Secretary of the International Textile, Garment and Leather Workers’ Federation on the job losses: “Unable to compete [with secondhand clothing imports], local businesses are collapsing, leaving hundreds of thousands of workers jobless.”
Although TOMS likely has good intentions, its donation strategy may negatively impact the communities it seeks to support. Like the litany of organizations that donate shoes, clothes, and other items to developing countries, TOMS may be undermining the development of local businesses. And while making in-kind donations benefits consumers in the short run, stifling local industry and increasing unemployment in this way will intensify poverty in the long-term.
Another issue with organizations like TOMS is that donating shoes can be financially inefficient. Shoes are typically inexpensive in developing nations—in Mumbai, as in Port-au-Prince, one pair is sold for as little as \$2. Shipping a used pair of shoes often costs more; for instance, Soles4Soles solicits donations of \$3–\$5 to ship a pair of shoes to Haiti. In addition to hurting local business, in-kind donations sometimes simply waste money. We could actually save money and simultaneously help stimulate local economies by just keeping our old shoes and instead buying new ones from community-based vendors…
As consumers of “socially conscious” products, we need to be aware of the impact of our purchases. In a culture where giving back through consumption is increasingly popular, and where myriad companies market items that purportedly help those in need, we should be cautious and deliberate about how we choose to support international development.
5.2 “The Best and Simplest Way to Fight Global Poverty”
Yglesias, Matthew. “The Best and Simplest Way to Fight Global Poverty: Proof That Giving Cash to Poor People, No Strings Attached, Is an Amazingly Powerful Tool for Boosting Incomes and Promoting Development.” Slate.com. May 29, 2013. http://www.slate.com/articles/business/moneybox/2013/05/unconditional_cash_transfers_giving_money_to_the_poor_may_be_the_best_tool.html.
Poverty is, fundamentally, a lack of money. So doesn’t it make sense that simply delivering cash to poor people can be an effective strategy for alleviating it?
When it comes to the global poor—the hundreds of millions of slum-dwellers and subsistence farmers who still populate the world—one might be more skeptical. Perhaps the problems facing these unfortunates are simply too profound and too complex to be addressed by anything other than complicated development schemes. Well, perhaps. But there’s striking new evidence that helping the truly poor really is as simple as handing them money. Money with no strings attached not only directly raises the living standards of those who receive it, but it also increases hours worked and labor productivity, seemingly laying the groundwork for growth to come…
The research comes from a 2008 initiative in Uganda’s very poor northern sections. The government announced plans to give roughly a year’s worth of average income (about \$382) to young people aged 18–34. Youths applied for the grants in small groups (to simplify administration) and were asked to provide a statement about how they would invest the money in a trade. But the money was explicitly unconditional—parceled out as lump sums with no compliance monitoring.
[Researchers] surveyed 2,675 youths from both the treatment and the control group before dispersal of money, two years after dispersal of money, and four years after dispersal of money. The results show that the one-off lump-sum transfer had substantial long-term benefits for those who got the cash. As promised, the people who received the cash “invest[ed] most of the grant in skills and business assets,” ending up “65 percent more likely to practice a skilled trade, mainly small-scale industry and services such as carpentry, metalworking, tailoring, or hairstyling.” Consequently, recipients of cash grants acquired much larger stocks of business capital and thus earn more money—a lot more money. Compared to the control group, the treatment group saw a 49 percent earnings boost after two years and a 41 percent boost after four.
…One of the most interesting results from the experiment is that recipients of grants actually report 17 percent more hours worked, suggesting that the money serves as a true bridge to economic opportunity. Grant winners increase both the quantity and quality of labor supplied, suggesting there should be at least some spillover benefits to the broader community. No doubt there are major limits to how far up the development ladder you can climb with this strategy: It might not work in moderately prosperous countries with more access to capital. But these results are extremely encouraging…
Poor people just need more money.
5.3 “Sacrificing Microcredit for Megaprofits”
Yunus, Muhammad. “Sacrificing Microcredit for Megaprofits” [op-ed]. New York Times. January 14, 2011. http://www.nytimes.com/2011/01/15/opinion/15yunus.html.
5.4 “Our Ineffectiveness at Measuring Effectiveness”
Pallotta, Dan. “Our Ineffectiveness at Measuring Effectiveness” (blog). Harvard Business Review. November 1, 2010. http://blogs.hbr.org/2010/11/our-ineffectiveness-at-measuri/.
Synthesis Questions
1. Do you think the one-for-one model can be expanded to all product categories? Why or why not?
2. Would you like to start a social enterprise? What sector or type of product line do you think might work?
3. Do you think the world needs more people like Blake Mycoskie?
4. Are there any social enterprises that you support or whose products you buy? What attracts you to these companies and their products?
Endnotes
1. Richard M. Murphy and Denielle Sachs, “The Fireflies Next Time: The Rise of Social Entrepreneurship and the Future for Global Capitalism.” Skoll World Forum in partnership with Forbes, May 2 2013, http://skollworldforum.org/2013/05/02/the-fireflies-next-time/.
2. Blake Mycoskie, “SXSW 2011 Keynote: Blake Mycoskie Gives Tip #1 for Business,” YouTube video, 3:39, from a keynote speech at the SXSW festival, posted by “SX TX State” on March 15, 2011, http://www.youtube.com/watch?v=Xlp1Pa1WKgM.
3. Adriana Herrera, “Questioning the TOMS Shoes Model for Social Enterprise (blog) New York Times, March 19 2013, boss.blogs.nytimes.com/2013/03/19/questioning-the-Toms-shoes-model-for-social-enterprise/.
4. For more information on the United Nations Millennium Development Goals, go to http://www.un.org/millenniumgoals/.
5. A detailed outline of the study can be found on the website of the Convergences World Forum, “Convergences,” accessed December 1, 2014, www.convergences.org/en/bibliotheque/barometer-of-social-entrepreneurship/.
6. Bill Gates “A New Approach to Capitalism in the 21st Century,” transcript of remarks at the World Economic Forum 2008, January 24, 2008, Davos, Switzerland, http://www.microsoft.com/en-Us/news/exec/billg/speeches/2008/01-24wefdavos.aspx.
7. Robert B. Zoellick, “Beyond Aid,” transcript of speech given at George Washington University, September 14, 2011, Washington, DC, web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:23000133~pagePK:34370~piPK:42770~theSitePK:4607,00.html.
8. PVOs are nongovernmental organizations (NGOs) they receive cash contributions from the general public.
9. Hudson Institute Center for Global Prosperity, “Index of Global Philanthropy,” 2013 (updated yearly), accessed December 1, 2014, http://www.hudson.org.
10. Amy S. Blackwood, Katie L. Roeger, and Sara L. Pettijohn. “The Nonprofit Sector in Brief: Public Charities, Giving, and Volunteering, 2012.” Urban Institute, September 2012, http://www.urban.org/UploadedPDF/412674-The-Nonprofit-Sector-in-Brief.pdf.
11. Craig Burnside and David Dollar, “Aid, policies, and growth,” World Bank, Policy Research Working Paper 1777.
12. Oxfam International, “Food Aid or Hidden Dumping? Separating Wheat from Chaffs,” Oxfam Briefing Paper 71, March 2005, www.oxfam.org/sites/www.oxfam.org/files/bp71_food_aid.pdf.
13. Adam Davidson and Caitlin Kenney, “How Foreign Aid Hurts Haitian Farmers,” Planet Money (blog), NPR, June 11, 2010, http://www.npr.org/blogs/money/2010/06/10/127750586/how-foreign-aid-is-hurting-haitian-farmers.
14. Garth Frazer, “Used Clothing Donations and Apparel Production in Africa,” accessed October 28, 2013, www.aeaweb.org/assa/2005/0108_0800_0502.pdf
15. Nina Mazar and Chen-Bo Zhong. “Do Green Products Make Us Better People?” Psychological Science, vol. 21 no. 4. April 2010, 494-498.
16. Aradhna Krishna, “Can Supporting a Cause Decrease Donations and Happiness?:
The Cause Marketing Paradox “, Journal of Consumer Psychology, 21 (3), (2011), 338-345.
17. Blake Mycoskie, Start Something That Matters (New York: Spiegel and Grau, 2012), 6.
18. Robert Zoellick, “Beyond Aid.”
19. “TOMS Announces It Has Given 10 Million Pairs Of New Shoes To Children In Need And Has Helped Restore Sight For 150,000 People Around The World,” PR Newswire, June25, http://www.prnewswire.com/news-releases/Toms-announces-it-has-given-10-million-pairs-of-new-shoes-to-children-in-need-and-has-helped-restore-sight-for-150000-people-around-the-world-213005361.html.
20. Booth Moore, “TOMS Founder Blake Mycoskie Is Known for Pairing Fashion and Causes,” Los Angeles Times, June 11, 2011, http://articles.latimes.com/2011/jun/11/image/la-ig-Toms-20110611.
21. For a typical speculative analysis of TOMS target market demographics, see for example “TOMS: In Business to Help Save Lives,” accessed December 1, 2014, http://tomspoli461.wordpress.com/toms-demographic/.
22. Bruce Wydick, Elizabeth Katz, and Brendan Janet, “Do In-Kind Transfers Damage Local Markets? The Case of TOMS Shoe Donations in El Salvador,” March 12, 2014, http://tinyurl.com/kfcw6ul. | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/01%3A_Chapters/1.05%3A_Social_Entrepreneurship.txt |
Source: Frank Gruber, (CC BY-NC-NDS, 2.0, 2008) Figure 6.1 Advertisers are continually exploring new media for advertising as they seek to break through the promotional clutter of modern life to attract the attention of consumers. Here, the Budweiser beer logo is imprinted on the top of a house adjacent to the Wrigley Field baseball park in Chicago, Illinois.
Legal and Ethical Constraints on Marketing and Advertising
This chapter explores the ethics of marketing and advertising. As the most visible form of marketing, advertising is one of the principal motors of a capitalist economy and also one of the largest modern industries: The global advertising market was valued at \$495 billion in 2013 (the United States was the largest national market at \$152 billion).1 Advertisements not only inform consumers of available products, services, promotions, and sales, they serve a vital business function by allowing brands to distinguish themselves from competitors, which rewards firms for improving the quality of their offerings. Advertising is a key ally for innovation, because advertising allows firms to create awareness and desire among consumers to buy new products. Despite these benefits, the advertising industry has long been suspected of using devious tactics. As a result, many consumers are highly skeptical and even disdainful of advertising in general.
Advertisers sometimes take the risk of shocking the public with their ads because they are seeking to break through the communications clutter of modern life. Today, the average American is exposed to a great number of advertising messages every day, with estimates running from several hundred to several thousand ads per day.2 In order to attract the public’s attention, advertisers may resort to appeals and tactics of questionable taste. Little wonder that more than half of Americans believe that advertising today is out of control. Social critics point to advertising as one of the most objectionable aspects of our consumer economy. From the billboards that blot out the countryside along highways, to the television shows that are interrupted every few minutes by outlandish commercials, to the mailboxes and e-mail accounts that become cluttered with direct marketing, advertising methods are often criticized for being intrusive, offensive, silly, and even dishonest.
As a result of the perceived abuses of advertising, national governments all over the world have imposed laws and regulations on the advertising industry. Every country or region has its own area of sensitivity. In many Muslim nations, for example, there are prohibitions against advertisements that display nudity or offend traditional notions of decency. France and Germany prohibit comparative advertisements in which one brand claims to be superior to another.
The modern marketplace abounds with products that pose difficult challenges for regulators. Consider the example of tobacco and alcohol. These products can be harmful or dangerous, but many people nonetheless desire to consume them. Most Western countries have decided that it is counterproductive to outlaw the sale of tobacco and alcohol, as doing so may create a black market and stimulate organized crime. The official response of most governments has been to allow the sale of such products but to prohibit or strictly constrain their advertising. Other product categories that tend to be governed by specific advertising regulations include pharmaceuticals and financial products.
Many products have positive uses but can also be dangerous if misused, like automobiles, knives, razors, lighter fluid, pesticides, toys, athletic equipment, and so on. In such cases, the law usually prohibits advertising that encourages the consumer to use the product in a dangerous fashion. Another common type of marketing regulation is one that prohibits advertisements from making false, deceptive, or misleading claims. In most countries, such rules are enforced by the ministry for consumer affairs. In the United States, rules against deceptive advertisements are promulgated and enforced by the Federal Trade Commission (FTC).
There are certain product categories in which exaggerated claims are commonly made. For example, in the case of skin creams, cosmetics, perfumes, deodorants, toothpaste, mouthwash, and so on, advertisers typically claim (or suggest indirectly) that their products make the consumer more physically attractive, especially to the opposite sex. The problem is that some consumers may not be sophisticated enough to discern the difference between innocent puffery and claims of effectiveness. Thus, teenage boys have been known to douse themselves with Unilever’s Axe deodorant products in the hope that they will attract females as effectively as is suggested in Axe’s notoriously provocative advertising. Many advertisements for such products come so close to making deceptive appeals that they may trigger the FTC’s attention. As a result, advertisers have learned to be cautious in the precise wording of their claims. For example, advertisements for skin cream may permissibly suggest that the user’s skin will “look and feel better” after use of the product, but they cannot include text guaranteeing the disappearance of wrinkles.
In many countries, regulators are especially vigilant when it comes to advertising aimed at children, because it is felt that children are sometimes more susceptible to manipulation or suggestion and are less likely to understand the dangers associated with the use of an advertised product. In Greece, for example, toy advertisements are prohibited between the hours of 7 a.m. and 10 p.m. In Sweden and Norway, all advertising aimed at children is prohibited, and in France, a child may not appear as the spokesperson in a commercial. In Holland, advertisements for sweets must include a toothbrush at the bottom of the ad to remind children to brush their teeth after eating sweets.
In this chapter, we will begin with a review of the advertising industry’s “self-regulation” of objectionable or unethical advertising. Many advertisements and marketing tactics fall into a regulatory gray area, where the advertisement is technically legal but still manages to offend some of the population. A frequent cause of such offense is the advertiser’s quest to develop a humorous or surprising advertisement. For example, one Danish advertisement featured an image of the Pope wearing a particular brand of sneakers, which offended many Catholics. In Italy, the fashion company Benetton shocked the nation by using an advertisement in which a priest is seen kissing a nun. In cases like these, it is not possible to make the advertisements illegal, but advertising industry associations feel it is necessary nonetheless to police the market for objectionable advertisements.
Our chapter-ending case study will deal with the ethical dilemma faced by executives at an advertising consultancy that is considering accepting an account for a global brand that manufactures skin-whitening products. The CEO of our company will call upon us to consider and debate the pros and cons of developing a US advertising campaign for Fair and Lovely, an Indian brand. In the United States, this product is demanded primarily by immigrants from South Asian countries, a large and growing demographic.
Many people feel that advertisements for such products contain racist appeals, since they are implicitly based on promoting the superiority of white skin. Is it ethical to market and promote such a product? Why or why not? Let us first consider some background to allow us to answer these questions.
Principles of Marketing Ethics
As stated earlier, every country has a basic framework of advertising law. Many types of advertisement are simply prohibited by law. However, with respect to advertisements that are legal but morally questionable (or otherwise objectionable), the advertising sector polices itself by applying self-regulatory codes of marketing and advertising ethics. This means that the advertising industry sets up its own committees to police questionable advertisements. Virtually every country has at least one advertising industry trade association with a self-regulatory panel or committee that reviews consumer complaints. After examining the advertisement in question, the panel decides whether or not to ask the advertiser to remove the advertisement; although advertisers are not legally obliged to follow the decisions of such committees, they usually do.
The self-regulatory panels base their decisions on ethical principles contained in codes of advertising ethics. The most influential codes are those established by the International Chamber of Commerce (ICC); ICC Codes are followed by advertising bodies in over 30 countries. The ICC Codes are based on the core principles of legality, decency, honesty, and truthfulness in all marketing communications. The ICC further emphasizes that “all marketing communications should be prepared with a due sense of social and professional responsibility and should conform to the principles of fair competition, as generally accepted in business. No communication should be such as to impair public confidence in marketing.”
Self-regulatory codes are deliberately framed in general terms, because it can be very difficult to objectively define what kind of advertisement can be considered “decent.” It is assumed that standards of decency vary on a national or cultural basis, and in addition are likely to change over time. Thus, the ICC Code thus provides general guidelines: “Marketing communications should not contain statements or audio or visual treatments which offend standards of decency currently prevailing in the country and culture concerned.”
The ICC Code further stipulates the following:3
• Marketing communications should be so framed as not to abuse the trust of consumers or exploit their lack of experience or knowledge. Relevant factors likely to affect consumers’ decisions should be communicated in such a way and at such a time that consumers can take them into account.
• Marketing communications should respect human dignity and should not incite or condone any form of discrimination, including that based upon race, national origin, religion, gender, age, disability, or sexual orientation.
• Marketing communications should not without justifiable reason play on fear or exploit misfortune or suffering.
• Marketing communications should not appear to condone or incite violent, unlawful, or antisocial behavior.
• Marketing communications should not play on superstition.
Examples of Objectionable Advertising
Discriminatory Advertisements
Source: Kim Bhasin and Patricia Laya, “26 Shockingly Offensive Vintage Ads,” Business Insider, June 14, 2011. Figure 6.2 This is a vintage Schlitz beer advertisement from 1951.
As we review the history of advertising, we will observe that certain ads and campaigns were previously considered acceptable, and even popular, but today would generally be regarded as objectionable (in clear violation of one or more of the principles outlined above). Such cases can help illustrate the ongoing evolution of community standards in marketing ethics.
Consider the vintage ad for Schlitz beer in Figure 6.2. A suit-clad husband is comforting his tearful wife, who has just burned the evening’s dinner. The advertising copy reads as follows: “Don’t worry, darling, you didn’t burn the beer.” This advertisement appears to be aimed at men and contains a mocking and patronizing reference to young housewives of the day. In its time, such an advertisement was probably considered by many to represent light-hearted humor, but today it would be considered offensive by many viewers. The unstated implication is that men are breadwinners while women are weepy and emotional homemakers. By contemporary standards, the Schlitz ad is overtly sexist.
While it might seem that such advertisements are relics of the past, controversial discriminatory appeals and references continue to appear in the media. As a further example, consider the advertisement for the Mountain Dew soft-drink in Figure 6.3:4
Source: Christopher Heine, “Mountain Dew Pulls ‘Arguably Most Racist Commercial in History’,” Adweek (2013) Figure 6.3 Mountain Dew’s zany but ill-fated campaign featuring a Mountain Dew-crazed goat.
Mountain Dew had run a successful series of edgy commercials targeted at Internet viewers and users of social media (an increasingly popular tactic). Perhaps influenced by the remarkable success of insurance company GEICO’s advertising mascot (a green gecko with a cockney accent), Mountain Dew had created a series of ads featuring a goat with a crazed passion for the caffeine-laced green soda. For one of these commercials, Mountain Dew hired hip-hop artist Tyler the Creator to create and produce the advertisement. In the ad in question, the goat is driving a car and is pulled over and arrested by a policeman. In flashback, we see the goat attacking a woman to wrench away her bottle of Mountain Dew, leaving the woman bloodied and wounded. In the next scene, the woman tries to identify her assailant from a police line-up that features the goat and four black men. Drinking steadily from a bottle of Mountain Dew, the policeman prods the woman to make a choice. The goat responds to the situation by speaking in a parodic hip-hop style, employing slang phrases such as “do her up” and “ya better not snitch on a playa.” Meanwhile, the Dew-amped policeman urges the woman to “nail this little sucker” and suggests it is “the one with the doo-rag.”
In retrospect, one wonders how such an offensive advertisement could have been released by a subsidiary of one of the world’s largest marketing organizations (Mountain Dew is a PepsiCo subsidiary). There was a great deal of outrage voiced when the ad was posted on Mountain Dew’s music/arts website. One college professor labeled the commercial as “arguably the most racist commercial in history.” The ad was promptly pulled and PepsiCo accepted full responsibility and apologized. To no avail, PepsiCo had pointed out that Tyler was African-American and that the four black men featured in the lineup were actually his close friends. Apparently, the irony intended by Tyler was meant to mock racism and discriminatory police practices. However, as many other advertisers had learned before, humor is a two-edged sword in advertising. It can attract attention, but it can also be misunderstood and cause offense.
Encouraging Harmful or Dangerous Practices
The advertisement in Figure 6.4 illustrates two categories of advertising that merit special scrutiny: advertisements featuring children and advertisements encouraging misuse of a product. Would any parent think it appropriate to have his or her infant shave himself with a razor? Of course not, but clearly that was not the intent of the advertiser.
Source: Kim Bashin, “20 Creepy Ads Featuring Children,” Business Insider, Oct. 26, 2011. Figure 6.4 This is a vintage Gillette advertisement from 1905.
The ad is attempting to be humorous by employing an absurd image, a baby shaving itself. The ad is also trying to make the point that the new Gillette safety razor is so safe that even a baby could use it without harm. There also may have been an intention to create an association between the smoothness of a baby’s skin and the closeness of the shave provided by the razor. By today’s standards, however, the advertisement appears reckless. While it is not possible that a baby would be influenced by an advertisement, it is not inconceivable that a small child of five or six years of age might be encouraged by this advertisement to play with a razor: The baby seems to be having such fun, and the small child might have seen his or her father shaving. Regardless of the likelihood that the advertisement could cause harm, today’s advertisers have become increasingly wary of using advertising that features children engaged in dangerous activities.
Potentially Dangerous Products: Advertising Bans and Restrictions
As stated above, there are products that are sold legally but that are considered to have such a high potential for harm or abuse such that their advertising has been banned or regulated. Let us consider just two such product areas: cigarettes and alcoholic beverages.
Cigarettes
Source: Cory Doctorow, “Particularly Despicable Cigarette Ad,”, Nov. 25, 2011. Figure 6.5This is a 1962 advertisement for the L&M cigarette brand featured in the edition of Popular Science magazine.
Concerned with medical research that revealed the health hazards of smoking, the US and European governments began to regulate tobacco advertising in the 1960s. The print ad in Figure 6.5, from 1962, features an idyllic family scene that suggests that a smoker gets “lots more” from a particular brand. The ad suggests that one acceptable way to enjoy the smoking experience is to smoke in the company of one’s spouse and children. In 1964, however, the US Surgeon General issued a formal report that concluded that smoking caused lung cancer and chronic bronchitis. This led to the government instituting a series of regulations aimed at the tobacco industry. The new laws required health warning labels on all cigarette packages and required that all cigarette companies file annual reports to the FTC. One goal of these regulations was to oblige the large tobacco companies to disclose their advertising expenditures and strategies, so that the government would be able to assess the link between tobacco advertising and smoking-related health risks.
Throughout the late 1960s, the US government accumulated and analyzed data on the marketing and advertising practices of the large cigarette companies and finally concluded that tobacco advertising encouraged smoking. As a result, the Public Health Cigarette Smoking Act was passed and signed into law in 1970. This act banned all cigarette advertising on television and radio advertising in the United States. At the time the prohibition went into effect, tobacco companies were spending eighty percent of their advertising budgets on television advertising, so the impact of the law was significant.
Subsequently, the United States enacted further restrictions on cigarette advertising. In 1999, billboard advertising of tobacco products was banned. In 2010, tobacco companies were prohibited from sponsoring athletic, musical, or artistic events, and from featuring their logos on apparel. However, the government has stopped short of banning print advertising. These governmental efforts have been matched by a certain level of self-regulation on the part of tobacco companies. For example, after a public outcry over its use of a cartoonish camel to sell cigarettes (it was feared that such advertising would be appealing to children and teenagers), Camel Cigarettes voluntarily stopped advertising in magazines in 2007. However, in 2013 Camel resumed its practice of advertising in magazines.
Alcohol
Alcohol has been classified by the International Agency on Research for Cancer (IARC) as a Group 1 carcinogen, meaning that the circumstances in which humans are exposed to alcohol are sufficient to create a risk of cancer. According to the World Health Organization (WHO), alcohol causes approximately 1.8 million deaths per year. In the United States alone, approximately 10,000 deaths per year are the result of automobile accidents caused by drunk driving. Despite these sobering statistics, the US government has taken a very different approach to alcohol advertising as compared with tobacco advertising. In essence, the FTC has primarily asked the alcohol industry to self-regulate.
Given that advertising is known to be an effective means of increasing sales and market share, why would alcoholic beverage companies agree to abide by self-regulation? Here, the example of advertising bans on tobacco products is instructive. Other industries whose products are seen as controversial have been influenced by the threat of an advertising ban similar to that placed on tobacco products. Consequently, trade associations for such industries have sought to maintain an open dialogue with legislators in the hope of appeasing them with effective self-regulation, so as not to be faced with a total ban. In the United States, the self-regulatory focus has been to minimize the exposure of underage drinkers to the advertising of alcoholic beverages. Currently, the alcoholic beverage industry has agreed to restrict advertising in print, TV, and radio to those venues where studies show that more than 70% of viewers will be of drinking age (i.e., older than 21). Further, the industry has agreed to support a public campaign against underage drinking and to include warnings about drinking responsibly in all advertising. The FTC has urged industry to apply the 70% rule to sponsorship of musical and sporting events as well but no agreement has been reached.
Even with these self-regulatory measures in place, there remains a good deal of concern among watchdog groups about the appeal of TV advertising to young people, who are considered more likely to abuse alcohol than older viewers. Moreover, the alcohol industry continues to employ advertising appeals based on the implicit sexual allure of drinking in bars or at parties. This approach is disturbing to industry critics who see the glamorizing and sexualizing of alcohol consumption as another way of attracting young people to alcohol products. As with cigarettes, the implicit threat is that if the industry can get young people “hooked” early in life, then they will become lifelong consumers of a product with known health risks. Youths who begin drinking at age 15 are four times more likely to become alcoholics than those who begin drinking at age 21.5
Case Study: The Marketing of Skin-Whitening Creams
Americans—in particular, white Americans—spend hours in tanning salons going to great efforts (and sometimes even incurring great pain and health risks) to make their skin darker. In other parts of the world, such as the Caribbean, Africa, East Asia, and the Indian sub-continent, people go to much expense to lighten their skin. They do so through the purchase and application of skin-whitening or skin-lightening creams that purport to make dark skin lighter. (Whether or not they actually work is controversial.) In many of these regions, lighter skin is more highly regarded socially. Arguably, this phenomenon is a sad by-product of colonialism, in that it is based on a positive association with the skin color of Caucasians. The flip-side is that, in the United States and Europe, darker skin is often considered attractive and exotic.
Fair and Lovely is an Indian brand of skin-whitening products manufactured and marketed by Hindustan Lever Ltd. (HLL). Fair and Lovely is the top-selling skin-whitening brand in India, followed closely by Fairever which is made by CavinKare. HLL advertising touts Fair and Lovely as a “miracle worker” and claims that it is “proven to deliver one to three shades of change.” As a result of competition from Fairever, HLL stepped up its marketing efforts in recent years, which led to a great deal of controversy. One of the controversial HLL ad campaigns was based on the theme “The fairer girl gets the boy.”
In one of the typical television commercials used in this campaign, a poor father is lamenting the fact that he does not have a son who can work and help support the family. His daughter, who has dark skin, looks on and clearly feels a sense of guilt. When she seeks employment, she is rebuffed because of her dark skin. Her unhappy lot is magically transformed with the use of Fair and Lovely skin-whitening cream. Suddenly, she not only appears to have much lighter skin, but the other characters in the commercial perceive her as much more beautiful. She dons a miniskirt and finds employment as a flight attendant, receiving the romantic attention of a fair-skinned Westerner. Among the many improbable benefits associated with use of Fair and Lovely, it seems, are a wardrobe change, secure employment, and a foreign boyfriend. The newly confident young woman is now a success and can take her proud father out for a lavish dinner.
The popularity of Fair and Lovely, as well as other skin-whitening creams, is tied to Indian cultural traditions. Lighter skin has been associated with a higher caste and therefore greater social status. Most of the famous female stars in India’s popular Bollywood movie industry are light-skinned. Do the Fair and Lovely products—or those of competitors—really make someone’s skin lighter? Or is this idea just an illusion perpetuated by effective advertising? In its official documentation regarding Fair and Lovely, HLL only states that the cream contains vitamins essential to skin care and UV blocking agents (as in sunscreens). In other words, rather than actually turning the skin lighter, Fair and Lovely may only work by keeping skin from getting darker, something likely to happen in sun-drenched areas of India. Critics claim that at best such products temporarily bleach skin lighter.
Not everyone in India is comfortable with the promotion of skin-whitening creams. A number of groups have come out against HLL and Fair and Lovely, charging the company with deceptive advertising and the promotion of discrimination and sexism. Many critics point out that the celebration of lighter skin is implicitly a rejection of darker skin. Thus, the Women of Worth Foundation launched a campaign called “Dark is Beautiful” to protest skin-whitening products.
Indian fashion writer Rumnique Nannar observed the following:
I’ve heard the stray dig “for a Punjabi, you’re quite dark” or jokingly mentioned, “are you sure you haven’t been adopted from Kerala?” or even the infamous, “wow, you are, like, so exotic”—all standard fare for me as the darker blip in family photos. Having your identity reduced to skin tone can be crushing, particularly when it doesn’t fit with the more fair ideal admired by most cultures. In India, ads by Emami and Fair and Lovely often seemed laughable and pompous to me, with grandfathers sanctioning the use of skin lightening creams to ensure the success and subsequent beauty of their dusky daughters.6
Nannar points out that to be identified or even judged according to one’s skin color is demeaning and diminishes a woman’s self-esteem and creates a sense of insecurity.
Topic for Debate: Should an American Advertising Agency Represent Fair and Lovely?
In this fictional case, a small but highly successful new advertising agency based in New York City, Enviralism, Inc., has become known for its ability to craft effective social media campaigns targeting the so-called millennial generation (young people born between the early 1980s and early 2000s). Enviralism has become successful especially with rapidly growing high-tech, fashion, and communications groups. This small agency is known for its cutting-edge creativity.
The CEO of Enviralism, Ralph Rodriguez, has been approached by Unilever, one of the world’s largest consumer goods conglomerates, with a US advertising budget in the tens of millions, to craft a strategy for marketing Fair and Lovely products to South Asian and East Asian immigrants and their first-generation children. Unilever is aware of the controversies surrounding Fair and Lovely products, but is also aware that there is a significant US market for skin-whitening products. As a result, Unilever would like to tap into Enviralism’s knack for thinking up unusual, outside-the-box marketing strategies. In its initial discussions, Unilever has talked about starting with an annual \$2 million budget, which might be doubled or tripled in subsequent years. This would instantly make Unilever the largest client at Enviralism, which is still a very small boutique agency with only 18 employees.
However, when Rodriguez discusses the opportunity with his Creative Director, Elaine Williams, she demurs: “That’s a straight-up racist product, Ralph. We can’t go there, no matter how much money it makes us.”
Ralph, who has just invested \$200,000 in renovating a Williamsburg loft into beautiful new offices for Enviralism (complete with state-of-the-art computer and graphics equipment), is not so sure.
He counters, “What about Coppertone? What about Hawaiian Tropic? Those products make people’s skin darker, supposedly, but nobody complains. What about Afro Sheen and other hair-straighteners for the black community? Nobody says those are racist. This is a \$500 million market in India alone, not to mention a standard skin-care product category in Japan, China, Indonesia, and Thailand—we’re talking about a market with well over two and a half billion people!”
Ralph can see that Elaine is not convinced, so he schedules a board meeting where his top executives will argue the case, pro and con, for accepting the Unilever account. You will be assigned to one of those teams. Should Enviralism agree to craft advertising campaigns for the Fair and Lovely product line?
Affirmative
Enviralism should agree to represent Fair and Lovely in the United States.
Possible Arguments
• We have a responsibility to customers to provide them with the products they desire; we should not demean our customers by treating them like children.
• Fair and Lovely is not dangerous and may provide psychological benefits to customers, like other cosmetics products.
• Fair and Lovely’s skin enrichment, sun blocking, and moisturizing features are beneficial.
Negative
Enviralism should refuse to represent Fair and Lovely.
Possible Arguments
• Fair and Lovely is an ineffective product and its related advertising claims are therefore deceptive.
• Fair and Lovely promotes and sustains social, racial, and ethnic stereotypes and prejudices.
• Marketing Fair and Lovely would be socially irresponsible.
Readings
6.1 “Whiter-Skin Ad Campaign Spurs Debate Among Thais”
Chomchuen, Warangkana. “Whiter-Skin Ad Campaign Spurs Debate Among Thais.” Wall Street Journal. October 25, 2013. http://online.wsj.com/news/articles/SB10001424052702304799404579157422770231930.
6.2 “Skin Whitener Advertisements Labeled Racist”
Sidner, Sara. “Skin Whitener Advertisements Labeled Racist.” CNN. September 9, 2009. edition.cnn.com/2009/WORLD/asiapcf/09/09/india.skin/#cnnSTCText
6.3 The Dark Side of Skin-Whitening Cream
Hundal, Sunny. “The Dark Side of Skin-Whitening Cream: The Dangerous Fashion for Skin-Whitening across Asia Perpetuates Racism and Should be Stigmatized as Such.” The Guardian. April 1, 2010. http://www.theguardian.com/commentisfree/2010/apr/01/skin-whitening-death-thailand/print.
Synthesis Questions
1. Is there anything wrong in marketing cosmetics products with the suggestion that they make the buyer more beautiful, even if this is unrealistic in many cases?
2. Should skin-whitening products be legal? Why or why not?
3. Does modern society have too much advertising? How could we control it? Can you suggest any specific mechanisms or regulations that should be implemented?
Endnotes
1. “Magna Global 2013 Advertising Market Forecast,” Magna Global, accessed October 23, 2012, news.magnaglobal.com/magna-global/press-releases/advertising-growth-2013.print.
2. For example, the article “Anywhere the Eye Can See, It’s Likely to See an Ad,” (New York Times, January 15, 2007), quotes figures ranging from 2,000 to 5,000 per day. Advertising industry sources argue that the number is much smaller, commonly around 300 per day.
3. “ICC Code of Consolidated Advertising and Marketing Practice,” International Chamber of Commerce (2011), accessed December 2, 2014, http://codescentre.com/about-you/marketer-view.aspx.
4.The commercial can be viewed on YouTube via the following link: http://www.youtube.com/watch?feature=player_embedded&v=MdFRWf-CNC8
5. AAFP, “Alcohol Advertising and Youth” (Position Paper), American Academy of Family Physicians, accessed October 25, 2013, http://www.aafp.org/about/policies/all/alcohol-advertising.html.
6. Rumnique Nannar, “Is Dark Beautiful? The Fairness Debate Opens Wide in India,” Huffington Post, August 26, 2013, http://www.huffingtonpost.ca/jugni-style/is-dark-beautiful-the-fai_b_3793257.html. | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/01%3A_Chapters/1.06%3A_Marketing_Ethics_-_Selling_Controversial_Products.txt |
Source: Richard Smith, (CC-BY 2.0, 2010) Figure 7.1 Farmers and food distribution and retail companies have learned to capitalize on the allure of organic foods, as we see in this eye-catching display of organic produce farmed in India. Many claims are made for the benefits of organic food—but is it really healthier? What are the pros and cons of growing and eating organic food?
The Organic Trend
Consumers all over the world are becoming increasingly health conscious and are more than ever concerned about the quality of their food supply. Food is also crucial economically: Forbes magazine estimates that food is the world’s biggest industry, citing 2006 World Bank statistics that indicated that food represented about 10% of global gross domestic product, roughly \$4.8 trillion dollars.1
One of the major food choices facing consumers today is whether to buy organic or conventional food. While consumers wishing to buy organic food once had to seek out a specialized health food store or a farmers’ market, organic food is now a standard offering at major supermarket chains. Today, organic food is the fastest growing segment of the American food industry. Between 1997 and 2010, US sales of organic food increased from \$3.6 billion to \$26.7 billion, an extraordinary rate of growth.2 By 2011, organic foods earned over \$31 billion in the United States and accounted for about \$450 million in exports in 2012. There are now over 17,750 USDA certified organic food producers and processors in the United States, and over 25,000 worldwide that meet USDA standards.
The growth in organic food sales has been so rapid over the past two decades that the phenomenon begs for explanation. Is it just a massive social fad, or does it reflect a profound change in our modern marketplace and in our personal consumption habits? Given the importance of food in the global economy, the trend toward organic foods is destined to have a major impact on a wide range of business sectors, including agriculture, food processing, supermarkets and groceries, fast food chains, restaurants, hotels, school and workplace cafeterias, caterers, and so on. Businesses in each of these sectors will have to make strategic decisions regarding the extent to which they will feature organic food products or related services.
In order to make responsible decisions, companies will need to understand the pros and cons of organic food, and especially why consumers are gravitating toward organic options. In fact, consumers who choose organic foods are driven by a number of different motivations and factors. The most common reasons for choosing organic foods are health concerns, including fear of pesticides and bacterial-borne illnesses; higher nutritional value; better taste; and environmental sustainability. However, as we will see, there is no clear consensus on the benefits to be derived from organic foods in any of these areas.
Regardless of the discussion over the benefits claimed for organic foods, there is no question but that they are more expensive. Organic foods are more costly to produce and as a result the prices to consumers are higher, with some organic options costing twice as much as their conventional counterparts. As a general rule, consumers will not pay significantly higher prices unless they are driven by some clear motivation. As with so many other areas in our society, the access to organic food—and the ability to afford it—comes most easily to those with deeper pockets. This creates a dilemma for many businesses faced with a choice between organic and conventional alternatives. If they offer organic food options, they will incur greater costs and have to charge a higher price. Whether or not this is a smart, strategic decision is an issue that every company (and every consumer) will have to decide on a case–by-case basis.
In this chapter’s debate section, we will consider the case of a private hospital deciding whether or not to institute an all-organic food service. Many hospitals are already beginning to provide some organic and locally produced food. As consumer demand increases for organic food, should hospitals follow this trend? The disturbingly high cost of health care is already one of the most contentious issues in American politics today. Should hospitals nonetheless accept the higher costs (and hospital charges) associated with organic offerings, so as to model and promote a public health policy related to nutrition? Should a hospital devote a greater percentage of its operating budget to providing organic food? The more a hospital spends on food, the less it will have available for other important health-related services. Will the health outcomes associated with eating organic food (even for the short time of the average hospital stay) outweigh the potentially higher costs entailed, or are the benefits too uncertain, taking money away from more pressing medical needs?
In order to answer these questions, we need to have a better understanding of the pros and cons of organic foods, especially relative to health outcomes. Organic farming practices attempt to promote a healthy and sustainable relationship between animals, humans, and the environment. Organic food production is a booming industry, but is it actually providing healthier, more nutritious food, or is it a successful packaging and marketing strategy with no real value to consumers?
What Is “Organic”?
In general, organic means that food was grown or produced without the use of synthetic pesticides or fertilizers, without GMO ingredients, without chemical food additives or artificial food-ripening substances, and without irradiation. Meats labeled as organic must come from animals raised without hormones or antibiotics. Processed foods may be allowed to contain a small percentage of non-organic ingredients and still be labeled organic (in the United States, no more than 5% non-organic). Note, however, that organic fruits and vegetables may be grown with a certain usage of natural (non-synthetic) pesticides and natural fertilizers. Animals raised for meat on organic farms may be treated briefly with antibiotics to manage disease.
In the United States, the 1990 Organic Foods Production Act (OFPA) set the national standards for the meaning, regulation, and certification of organic food. Only farms and facilities that have been inspected and certified by the USDA can claim to be organic and use organic on their labeling and packaging. Other countries around the world have different standards for what it means to be certified organic, which makes the import and export of organic foods difficult. In response to these constraints, the European Union and the United States created a new partnership in organic trade equivalence in 2013 with the objective of allowing organic products to flow more easily internationally.
For most of human history, agriculture was, by default, what we now call organic. Chemical pesticides only came into regular use about 60 years ago, allowing for expanded farming and greater output. Early on, most pesticides used were insecticides, but as potency increased, the amount of insecticides needed began to drop. Now about 70% of pesticides used are herbicides, and most of those are used in the cultivation of corn. Although pesticides are used widely across the United States, there is some fluctuation depending on the current pest infestations and types of crops. As public awareness grew about the potential dangers of chemical pesticides, certain pesticides were banned during the 1960s and 1970s. Consumers and public health advocates began demanding a return to natural and organic food production. The increased scrutiny led to new restrictions on the toxicity of allowable pesticide use. Today, chemical pesticides must adhere to health and environmental standards, and chemical companies continue developing new pesticides that may be less harmful to humans and the environment.
In addition to organic pesticides, organic farmers battle insect and pest infestation with crop rotation and cover crops.
Organic Food Evaluated: Pros and Cons
A poll conducted in 2011 by NPR–Thomson Reuters found that 58% of American consumers preferred organic foods.3 The reasons cited by those that preferred organic were support for farmers’ markets (36%), avoiding toxins (34%), environmental impact (17%), and taste (13%).
Let us now briefly examine some of the claimed benefits and alleged disadvantages of organic food and organic farming.
Environmental Impact
Pro
• Because organic farming is done without the use of pesticides and chemicals, toxic residues do not poison the land, water, and air. Organic farming is a sustainable use of land and resources. Crop rotation promotes fertile, healthy soil.
• Pesticide use in conventional farming contaminates runoff, water flowing over land, which is a natural part of the water cycle. Pesticide residues are found in ground water, surface water, and rainfall. This means that contamination may not be isolated in food produced with pesticides, but affects the environment as well.
• Healthy soil is a key component of organic farming.
• Organic farming seeks to protect and promote biodiversity.
• Conventional food production often involves thousands of miles of transportation from point of production to the grocery store, using oil and gas that contribute to global warming.
Con
• While one of the arguments for organic farming is the absence of chemical pesticides, natural pesticides may be used on organic farms, and these may also have potentially harmful effects. Organic plants grown without chemical or natural pesticides or fertilizers may produce naturally occurring pesticides, called phenols, to protect themselves against insect infestation. The effects of phenols on humans is an ongoing area of research and debate, as those in favor of organics tout their benefits while those skeptical of organics purport their potential health risks.4
• Pesticides allow farmers to obtain larger harvests and are therefore an economic asset to food production. Every dollar invested in pesticides results in about four dollars’ worth of crops produced. Pesticide use makes more economic sense, and provides more food to more people.
• Organic farming is too costly in terms of its greater use of land and resources. Organic farms are less productive (80% in one study) than conventional farms,5 and therefore require greater land use. In organic farming, weeds are removed without the use of chemicals. However, mechanical cultivation—including turning soil between crops to reintegrate plant parts and physically removing unwanted plants—can actually damage soil structure, remove needed moisture, release carbon into the atmosphere, and lead to increased soil erosion.
• As organic food carves out a greater share of the market and international markets expand, the carbon footprint of organic food distribution may exceed that of conventional food.
Health Impact
As often happens when opposing groups look at the same data, they come to different conclusions. In the view of proponents, organic food is much better for your health than conventionally grown alternatives. However, a number of studies, including a controversial metastudy published by researchers at Stanford University Medical School in 2012, find no evidence of significant benefits from organic food consumption in terms of health outcomes. There have been no long-term studies following children and adults who consume only organic food, and such studies would actually be rather cost-prohibitive to conduct. Nonetheless, let us review the arguments put forward by both sides.
Pro
• Organic produce has much lower—as much as 81% lower—levels of pesticide residue than conventional food. It also almost never contains high-risk pesticides. And while conventional produce can harbor multiple pesticide residues, that is rarely the case with organic produce.
• Evidence suggests that fetuses exposed to pesticides have higher rates of neurodevelopmental problems and disorders, birth defects, autism, ADHD, asthma, and lower IQ. In one study, school-aged children who began a primarily organic diet showed no pesticide exposure after only five days. Switching to an organic diet can thus have immediate and very beneficial advantages. Like fetuses and young children, other segments of the population, especially the elderly and people with degenerative diseases, are particularly vulnerable to the damaging effects of pesticide exposure. Another area of pesticide use that cannot be overlooked is its impact on the health and safety of farmworkers who have higher levels of exposure with conventional farming practices than organic.
• Proponents of organic farming maintain that organic food is more nutritious than conventional food. Organic apples, strawberries, grapes, carrots, milk, and grains have been found to have higher levels of vitamin C, antioxidants, and phenolic acids as compared to conventional food. On average, organic produce has nutrient levels 12% higher than conventional fruits and vegetables.
• Organic dairy products and meats contain an optimal balance of omega-6 and omega-3 fatty acids. Fats, consumed in the right amount, are crucial to human health. They provide energy, are the building blocks of cell membranes, and can be converted into other essential substances, like hormones, which are necessary for healthy bodily functioning. Diets higher in omega-6 and lower in omega-3 fatty acids can lead to a higher incidence of myocardial infarction and heart disease. On the other hand, eating diets with the optimal ratio of omega-6 and omega-3, found in organic food, can decrease the risk of heart disease.
• Organic farming virtually eliminates the consistent use of antibiotics in meat and dairy production, limiting the spread of antibiotic-resistant bacteria into the human population. Conventional meats are 300% more likely than organic to test positive for bacteria resistant to three or more antibiotics.6 About 70% of antibiotics given in the United States are used for animals in meat production, not in treating sickness, but to enhance growth and to mitigate the ill effects of overcrowding.7 Antibiotic resistance makes the treatment of infectious diseases much more difficult to control. The Centers for Disease Control (CDC) lists antibiotic resistance as one of its top concerns. The production of organic meat therefore has an immense public health benefit.
Cons
• The now well-known and often referenced Stanford study, a meta-analysis and comprehensive review of academic research on organic food and production, found virtually no health benefits associated with consumption of organic food. The Stanford research reported that organic food had only a 30% lower risk of pesticide residue than conventional food, compared to the 81% lower risk claimed by those in favor of organics.
• The Stanford study also found no significant differences in the nutritional value of organic versus conventional produce. The researchers noted that the risk for the presence of E. coli (a common bacteria) was about the same in organic and conventional produce. Although they also acknowledged that only five studies have been done, they found that four out of the five studies actually found a slightly higher risk for E. coli in their organic samples.
• Other studies have found that manure, a natural fertilizer, often transfers E. coli to soil, plants, and water used in irrigation and cleaning. Even though organic farming requires manure to be composted before usage and may only be applied to soil not used for growing food for human consumption, E. coli may still survive and can live in soil for over 200 days. This means that even if crops are rotated, E. coli can remain a threat to a new crop and to human consumers.
• Actual practices in organic farming differ widely. Although the USDA has attempted to define “organic” for certification purposes, these regulations nonetheless permit a great deal of variation of production methods in organic farming, just as in conventional food production. Simply having an organic label may not be a guarantee of best practices or of safe and nutritious food.
• In October 2012, the American Academy of Pediatrics (AAP) issued their first statement about organic food consumption, stating that there simply is not enough evidence to support claims of clear health benefits from an organic diet. While the AAP confirmed research that higher levels of pesticide residues and antibiotic-resistant bacteria are found in conventional rather than organic food, they advocated for parents to provide their children with a well-rounded diet, including a variety of fruits and vegetables, whether organic or not.
Hospitals, Health Care, and Organic Food
Just as ordinary consumers are showing a steadily increasing market preference for organic food, medical patients are following suit, expecting and demanding fresher, healthier, organic, and local foods. Many hospitals are beginning to respond to this demand, offering more organic food, hosting farmers’ markets in their facilities, and providing more information about nutrition to patients and medical workers. In addition to patient demand, organizations like the international coalition Health Care without Harm (HCWH) have pushed for changes to provide healthier and more sustainable food options in the health-care industry as well as education about nutrition. HCWH has issued a blueprint for change, including a variety of ways that hospitals can incorporate healthier food in their facilities, ranging from forming food “teams” and holding conferences to purchasing local and/or organic food.8
Traditionally, economic costs and organizational issues have made buying and providing organic food in hospitals a challenge. Hospitals have their own regulations and standards concerning food and food delivery. For example, some hospitals require potatoes to be delivered already peeled and cut, which lies beyond the production and distribution capabilities of most small organic farms.
Hospitals in the United States have predominantly relied on large-scale, nationwide food distributors. However, in 2005, MedAssets, a major purchasing agent for the health care industry, teamed up with United Natural Food, the leading distributor of natural and organic food, to supply healthier food options to hospitals around the country. In the first quarter of 2013, United Natural Food earned revenues of about \$1.64 billion, up 22% from the previous year. There are almost 6,000 registered hospitals in the United States today.9 More than 2,000 hospitals in the United States offer some permutation of organic and local foods to patients and staff.
Many hospitals already do community outreach, running educational programs targeting nutrition and healthy eating. Some examples of local/organic food initiatives supported by hospitals today include the following:
• Catholic Healthcare West, a health system with 42 acute care facilities in three states, has developed an educational program about the relationship between food production and ecology, and no longer purchases dairy products containing the hormone rBGH.
• Kaiser Permanente hosts farmers’ markets in 25 of its medical buildings around the country and serves local and organic produce according to seasonal availability. To balance cost concerns, Kaiser has made changes in some of its traditional food service, including eliminating dessert from patient meals and replacing it with fruit.
• Dominican Hospital in Santa Cruz, California, buys organic food from a local farm and has created its own vegetable garden.
• Good Shepherd Medical Center in Hermiston, Oregon, no longer serves deep fried food and is switching to more organic food.
• St. Luke’s hospital in Duluth, Minnesota, now provides fair trade coffee, rBGH-free milk, wild salmon, and local organic salad.
• Alice Peck Day Memorial Hospital in Lebanon, New Hampshire, purchases vegetables from a local organic farm and provides an informational card with food served to patients. Food waste is returned to the farm for composting.
• Fletcher Allen Health Care in Burlington, Vermont, buys organic eggs and grows vegetables on its rooftop garden.
Although food does not make up a large part of a hospital’s operating budget, food prices continue to rise between 3% and 5% yearly, and with the cost of health care also increasing, every dollar spent must be justified by hospital management.
While patient demand may be spurring change, physicians and hospital workers also have a personal stake in the food served in hospital cafeterias and commissaries. Doctors, nurses, and other hospital workers account for most of the food consumed in hospitals. As more research shows links between diet and health outcomes, hospitals have the opportunity to model best practices. But that begs the question, what are best practices, and do they imply 100% organic offerings? Health care costs are often exorbitant and keeping costs down is a major issue for hospitals operating on a tight budget. Some people argue that food eaten during a brief hospital stay will have negligible effects on patient health outcomes and may simply not be worth the cost. Others, however, suggest that hospitals have a unique and powerful role to play in public health.
Case Study: Organic Hospital
In late January 2014, the (fictional) Lincoln Memorial Hospital of Yonkers is holding its annual strategic retreat for top executives. The retreat is held on a Friday and Saturday at the Taconic Hotel, a small hotel on the Hudson River. Item 1 on the agenda is a proposal by the hospital’s vice president of marketing, Jonah Strong, who has suggested that the hospital move to a 100% organic food policy for patients as a means of distinguishing itself from competitors.
Lincoln Memorial is a for-profit hospital owned by a large health-care provider, OmniHealth, which owns 11 other hospitals in 3 states. OmniHealth management is concerned that profits have been stagnant for the past 3 years at Lincoln Memorial and has informed Lincoln’s CEO, Dr. Sandra Maxwell that the company would like to see a return to 2% to 3% growth per year. Dr. Maxwell is prodding her executive staff to come up with new ideas to control costs and increase revenues.
Lincoln Memorial is an above-average sized hospital of 575 beds that offers a diverse range of medical services, from emergency care to maternity, pediatrics, cancer treatment, and so forth. Although it is not facing competition from other large hospitals in the area, a new trend toward small local clinics seems to be taking business away from Lincoln.
Lincoln is trying to control costs to stay attractive because the average cost of a stay at Lincoln is currently \$1,925/day, which puts Lincoln slightly above several other competitors. As a result, Lincoln’s marketing approach is to vaunt its superior services. This is becoming increasingly hard to do as the main hospital building dates from 1968 and is beginning to need a renovation, which could cost over \$10 million.
When the idea of the all-organic option was put on the table, Dr. Maxwell was approached by the vice president of human resources, Martin Torres, who informed her that the doctors and nurses would insist that food in the hospital’s cafeterias would also be organic, so that costs could escalate. The Food Services Director, Jennifer Wang, is extremely opposed to the idea. Ms. Wang tells Maxwell:
Do you have any idea how hard it is to source organic food for 1,000 people per day? Our patients and staff are used to eating food like tomatoes and spinach out of season, and that’s when organic prices go sky-high, sometimes even three times higher than conventional. Right now, the average food cost per patient is running at \$55 a day and we’re billing them \$125 just for food. If we have to go to 100% organic, my costs are going to go up at least 20% and we’ll have to pass that on, it could add \$30–\$50 per day to the cost of a hospital stay. Patients are already disturbed by the current cost per day, if this is what pushes us over the \$2,000-a-day threshold, I’m afraid you’ll get sticker shock.
On the other side, Jonah Strong, the marketing vice president, has argued that it would be worth it:
Have you been to the Whole Foods recently? It’s packed every day, with very long lines, and those people are our customers. They’re already voting for organic with their pocketbooks. Organic food consumption is going up 20% per year and now we’re getting patients who get very upset if we can’t tell them if their food has GMOs. There’s no way we can keep bringing patients in, with all these new clinics, unless we can distinguish ourselves. If we don’t jump ahead of the other hospitals and distinguish ourselves first, one of the other hospitals will beat us to the punch.
Dr. Maxwell asks you to prepare the strongest arguments you can think of, on one side or the other, for presentation at the executive retreat.
Topic for Debate: Go Organic, or Stay Conventional?
Affirmative
Memorial should go to a 100% organic option.
Possible Arguments
• It will allow us to improve the health outcomes of our patients.
• It will allow us to do public service by performing a leadership role in health education.
• It will distinguish us from competitors.
• It will motivate our employees and show them that we care about them.
Negative
Memorial should not move to a 100% organic option.
Possible Arguments
• There is no evidence that organic food consumption has a significant impact on health.
• It would simply increase our costs, which will render us less competitive.
• Our average patient stay is only 5 days and, in that time, the benefit of organic food, if any, would be negligible.
• We should care more about cost and health outcomes than about marketing.
Readings
7.1 “Lots of Chatter, Anger over Stanford Organic Food Study”
Mestel, Rosie. “Lots of Chatter, Anger over Stanford Organic Food Study.” Los Angeles Times. September 12. 2012. http://articles.latimes.com/print/2012/sep/12/news/la-heb-stanford-organic-food-study-controversy-20120911
7.2 “Michael Pollan Responds to Study Finding “No Significant Health Benefit” to Organic Food”
Brooks, Jon. “Michael Pollan Responds to Study Finding ‘No Significant Health Benefit’ to Organic Food.” News Fix (blog). NPR: KQED News. September 4, 2012. blogs.kqed.org/newsfix/2012/09/04/michael-pollan-organic-study/.
You may have heard the NPR story this morning about the meta-study from Stanford University, published in the Annals of Internal Medicine, which found “no significant health benefit” to organic food. As physician R. Dena Bravata, the study’s co-author, told KQED Science’s Amy Standen today, when it comes to healthfulness, “there is, in general, not a robust evidence base for the difference between organic and conventional foods.”
Huh.
A 2010 Nielsen study found 76 percent of respondents bought organic because they thought it was healthier. So this seemed to merit a call to the person who convinced me in the first place that it was okay to pay \$4.00 for a head of cauliflower: local journalist, professor, and food advocate Michael Pollan, whose book The Omnivore’s Dilemma was a major influence in popularizing organic and locally produced food.
JON BROOKS: So is this meta-study a big deal?
MICHAEL POLLAN: I’m not sure it’s a big deal. The media’s playing it as if there were something new here, but this is not new research, it’s a meta-study [a review of previously conducted research], and I’ve seen the exact same data analyzed in a very different direction. A lot of it depends on how you manage your assumptions and statistical method.
I think we’re kind of erecting a straw man and then knocking it down, the straw man being that the whole point of organic food is that it’s more nutritious. The whole point of organic food is that it’s more environmentally sustainable …which has a lot more to do with how the soil is managed and the exposure to pesticides, not just in the eater’s diet but to the farmworker…
JON BROOKS: Let’s say you’re a consumer standing there at your grocery store and you have a choice between an organically grown piece of produce grown far away and a conventionally grown piece grown locally. All things considered, which is the best choice?
MICHAEL POLLAN: It depends on your values. If you’re concerned about nutritional value and taste, you might find that the local food, which is more likely to have been picked when it was ripe, is better. Because any food that’s traveled a few days to get to you or been refrigerated for a long time is going to have diminished nutritional value. That argues for fresh being more important than organic.
But if you’re concerned about pesticides—let’s say you’re pregnant or have young kids you’re feeding—then you might choose organic, because it will have on balance fewer pesticide residues. You may also be concerned with the welfare of the people picking and the farmers growing your produce, or you may be concerned about soil health—that would argue for organic too…
I tend to favor local food, whether it’s certified organic or not. Most of the local food available to us in the Bay Area, though, tends to be grown organically, even if it’s not certified. So it is possible to have it both ways. If you’re shopping at your farmers’ market, you’re getting food that’s very fresh, probably very nutritious, and probably grown without synthetic pesticides.
7.3 “Mythbusting 101: Organic Farming > Conventional Agriculture”
Wilcox, Christie. “Mythbusting 101: Organic Farming > Conventional Farming.” Science Sushi (blog). Scientific American. July 18, 2011. http://blogs.scientificamerican.com/science-sushi/2011/07/18/mythbusting-101-organic-farming-conventional-agriculture/.
7.4 “The Benefits of Organic Food—For Less”
Villacorta, Manuel. “The Benefits of Organic Food—For Less.” Healthy Living (blog). Huffington Post. July 12, 2011. http://www.huffingtonpost.com/manuel-villacorta/natural-produce-pesticides_b_894031.html
…You have people who swear by organics and others who feel the whole movement is overblown—and often I hear that the organic movement is just a scheme to charge more at the markets. This whole “organic” concept has complicated our already difficult relationship with food.
I don’t write this article to fan the flames of the argument. Certainly, I understand that emotions on both sides run high… What I have learned that’s valuable to everyone, I think, is that there exists a middle ground between pesticide crops and certified organics: that is, fruits and vegetables that are seasonal, pesticide-free, and locally grown by farmers. There is such a thing as “clean” crop that is 100 percent natural in terms of no pesticides, but still absent an organic label. This comes as a surprise to many as we seem to think now that everything not marked organic is chemically tainted.
Finding pesticide-free non-organics is a great way to spend less money and enjoy natural produce. The only downside—if you consider it one—is that you have to eat seasonally, meaning you have to stop expecting ripe tomatoes and avocados in February in many parts of the country
Farmers’ markets provide a great opportunity to learn exactly how and where your food is produced and to sample items prior to purchasing. This option will also reduce cost, as well as be pesticide-free. Regardless of the kind of produce you buy, please buy it. I believe the benefits that come from consuming fruits and vegetables will outweigh the hazards of conventional farming…
Synthesis Questions
1. Does this chapter increase or decrease your motivation to consume organic food products? Explain why.
2. What is a more important motivation—in your view—for consuming organic food: a) that it is better for your health, or b) that it is better for the environment and for farmworkers? Explain.
3. Let us say that, instead of a hospital as our case study example, we had used the example of a wealthy private school for K–12 students. Would the argument be stronger or weaker for adopting organic food in the cafeteria of the school? Why?
Endnotes
1. Sarah Murray, “The World’s Biggest Industry,” Forbes Magazine, November 15, 2007, http://www.forbes.com/2007/11/11/growth-agriculture-business-forbeslife-food07-cx_sm_1113bigfood.html.
2. Smith-Spangler, Crystal, et al., “Are Organic Foods Safer or Healthier than Conventional Alternatives?” Annals of Internal Medicine, 157 (2012): 348–366.
3. Scott Hensley, “Organic Foods Have Broad Appeal, But Costs Temper Demand,” NPR.org, July 20, 2011, http://www.npr.org/blogs/health/2011/07/20/138534183/organic-foods-have-broad-appeal-but-costs-temper-demand.
4. Burke, Maria. “Don’t Worry, It’s Organic.” Chemistry World 1.6 (2004): n.p. Royal Society of Chemistry. http://www.rsc.org/chemistryworld/Issues/2004/June/organic.asp
5. Maeder, Paul, et al., “Soil Fertility and Biodiversity in Organic Farming.” Science 296.5573 (2002): 1694-697. http://www.sciencemag.org/content/296/5573/1694
6. Benbrook Charles. “Initial Reflections on the Annals of Internal Medicine Paper “Are Organic Foods Safer and Healthier than Conventional Alternatives? A Systematic Review.”” 4 Sept. 2012. http://caff.org/wp-content/uploads/2010/07/Annals_Response_Final.pdf
7. “Pew Recommendations to FDA Regarding Use of Antibiotics in Food Animal Production.” The Pew Charitable Trusts, 22 Feb. 2012. http://www.pewtrusts.org/~/media/legacy/uploadedfiles/phg/content_level_pages/issue_briefs/HHIFIBRecommendationsforFDAFactSheetpdf.pdf
8. Larry Cohen et al., “Cultivating Common Ground: Linking Health and Sustainable Agriculture” (Oakland, CA: Prevention Institute, September, 2004), , 14–15, www.noharm.org/lib/downloads/food/Cultivating_Common_Ground.pdf.
9. “Fast Facts on US Hospitals.” Fast Facts on US Hospitals. American Hospital Association, 2 Jan. 2014. http://www.aha.org/research/rc/stat-studies/fast-facts.shtml
The author wishes to acknowledge the invaluable research assistance of Vanessa Hemenway in the preparation of this chapter. | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/01%3A_Chapters/1.07%3A_Organic_Food_-_Health_Benefit_or_Marketing_Ploy.txt |
Source: Lisette Cheresson, (CC-BY, 2013) Figure 8.1 Coffee is the world’s second-most traded commodity, behind petroleum. Because coffee grows best on hillsides, harvesting can be labor-intensive – it takes a lot of work to get ripe coffee beans from the bush to your cup. Fair Trade’s goal is to make life better for those involved in that process.
Fair Trade: Conscious Consumerism Comes to Coffee
The concept of fair trade arose in the mid-twentieth century as a means of providing farmers and farm workers around the world with employment benefits similar to those found in developed nations. At its broadest level, fair trade can be seen as an initiative of the developed world to reward principled production in the developing world. More specifically, fair trade operates primarily as a certification system under which qualified producers (who follow certain environmental and labor standards) are guaranteed a minimum price for their production. This price guarantee is intended to augment and stabilize the revenues of producers in developing countries, so that they can invest in social welfare infrastructure and environmentally friendly farming methods. It is worth noting at the outset that there are some slight variations in the way this concept is spelled or presented. The generic term for this entire field is “fair trade,” but we also commonly it spelled as “Fairtrade” or presented with capital letters as “Fair Trade.” These latter two versions are actually trademarks that are owned by fair trade organizations, which certify that a participating company has met certain standards.
When people discuss fair trade, the conversation usually begins with coffee, which remains by far the most economically significant product category covered by fair trade. Although fair trade has expanded to include other agricultural and manufactured products, such as bananas, tea, honey, sugar, rice, cacao, organic cotton, textiles, and handicrafts, any attempt to evaluate the success or failure of the fair trade movement must begin with an examination of its role in the coffee industry. With corporate coffee giants like Starbucks vaunting their sales of fair trade coffee, most consumers have become aware of the movement, although few are able to precisely define the mandatory standards that must be satisfied in order for a product to be called fair trade. Now, fair trade coffee is as ubiquitous on supermarket shelves as food deemed certifiably organic—but compared to the organic label, the fair trade certification process is more complex and subject to different interpretations from different certifying bodies.
In this chapter, you will be asked to consider whether a New York–based specialty coffee chain should make the transition to selling exclusively fair trade coffee and tea products. The chain’s CEO is aware that fair trade is generally well viewed by consumers, but she has also read some disturbing articles in the press about inconsistencies and even corruption in the fair trade sector. Should she ignore what she has read? Making the switch will increase costs to her consumers, whose cup of coffee will have to go up in price by twenty-five to fifty cents—but on the positive side she will be able to claim that her business is socially responsible and sustainable. Does a coffee shop chain that aspires to the highest level of social responsibility have an obligation to engage in fair trade, even if the existing fair trade system is not perfect? In order to discuss this issue, we need to arrive at a deeper understanding of what fair trade means.
The Origins of Fair Trade
As with many other progressive social programs, the fair trade concept can be traced back to the personal initiatives of a few dedicated reformers with a social conscience. In 1946, Edna Ruth Byler, an American businesswoman, had the idea of importing needlecrafts from impoverished Puerto Rican communities and paying their creators a fair wage for their work. Byler’s efforts became the foundation for Ten Thousand Villages, the first North American nonprofit organization devoted to connecting handicraft manufacturers in developing countries with developed-world commodity buyers. Today, Ten Thousand Villages maintains long-term relationships with artisans in 38 countries that provide stable opportunities for income.1
Byler’s efforts constituted a precursor of fair trade, but the first organizations to utilize the fair trade designation in its modern sense were European. The first fair trade organization in Europe was in the United Kingdom, an offshoot of Oxfam UK, which during the 1950s had sold crafts made by Chinese refugees. By 1964, this had developed into the fair trade Organization, and in 1967, the Netherlands initiated its own cooperative, fair trade Original. Following a concept similar to that of the Ten Thousand Villages storefronts in the United States, the Dutch opened a fair trade World Shop in 1969. World Shops became the first retail distribution network of fair trade products and the first European World Shops conference was held in 1984.2
Guatemalan-grown fair trade coffee was introduced in the Netherlands in 1973. In 1988, the first fair trade coffee brand, Max Havelaar, hit the market. Within a year, Max Havelaar commanded a 3-percent share of all coffee sales in the Netherlands. By the late 1980s, there were several national fair trade cooperatives operating in Europe under different umbrella organizations, some of which spanned the jurisdiction of several countries. One of these was the Network of European World Shops (NEWS!), which was formed in 1994 and soon represented roughly 3,000 different shops across the continent.
Fair trade quickly outgrew its European origins. In 1989, the first global fair trade network was initiated, the International Fair Trade Association (IFAT). Five years later, the first network of fair trade organizations was founded in North America, called the Fair Trade Federation. In 1997, Fair Trade Labeling Organizations International (FLO) was founded with the intention of creating a unified worldwide certification scheme. There are currently 23 members of FLO around the world. Founded in 1998, TransFair USA (which changed its name to Fairtrade USA in 2010) was an early FLO member and became the leading third-party certifier of fair trade goods sold in the United States. TransFair got its start in California, importing the production of Nicaraguan coffee farmers.
In 1998, four European Fair Trade organizations banded together to form an international coalition to promote and more clearly define fair trade practices around the world. Calling their coalition FINE, these organizations set forth one of the most commonly used definitions of fair trade:
A trading partnership, based on dialogue, transparency, and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, disadvantaged producers and workers—especially in the South. 3
Fair trade, in the view of its supporters, is quite different from free trade, the defining international economic strategy of the twentieth century. The primary goal of free trade is to increase the economic growth of both developed and developing nations. The massive and continuing expansion of global free trade has been driven by consumers and manufacturers in developed nations. Fair trade, on the other hand, is intended to serve the interests of workers in developing nations. Fair trade is meant to empower manufacturers and farmers in developing nations by providing them with privileged access to socially conscious consumers in the developed world.4
Fair Trade in Action: The Key Players
Most socially conscious consumers who are aware of fair trade simply assume that it signals that an item is somehow a “good product,” either for environmental reasons or because workers involved in production are well paid. However, as we shall see, the system is more complicated than one might expect, and a well-informed consumer or business needs to go deeper to have a sufficient basis for evaluating fair trade and deciding whether or not to participate in it.
One of the reasons for the complexity of the fair trade system is that there is no universal fair trade authority. There are several important international organizations that serve a coordinating function, but none of these has the power to impose standards on all players in the field. In fact, there are many different kinds of fair trade organizations: international nonprofit organizations, regional nonprofit organizations, local nonprofit organizations that certify fair trade brands, local nonprofit organizations that certify fair trade farming and exporting cooperatives, and finally, both nonprofit and for-profit inspection organizations that visit the farming cooperatives to determine whether they meet the criteria to be certified as fair trade. Let us describe a few of the most important organizations.
Most fair trade certifiers and umbrella organizations are now members of the World Fair Trade Organization (WFTO; formerly IFAT). The WFTO serves as a global network and clearinghouse, serving the interests of over 370 independent organizations in more than 70 countries.5Fairtrade International (FLO) is an international organization, based in Bonn, Germany, that promotes the most widely used certification system for products designated as fair trade or “Fairtrade.” Note that FLO deliberately distinguishes itself by using a special way of spelling the term with no space between the words. One reason for this approach is that FLO has registered “Fairtrade” as a trademark, which it then licenses only to those organizations that meet its standards. The Fairtrade trademark has become the world’s leading way of designating that a product qualifies as fair trade. Note, however, that other organizations may still prefer to certify a product as fair trade.
FLO-CERT is a private, for-profit company that carries out certification audits for national organizations that wish to authorize local brands and vendors to use the Fairtrade label.6Fair Trade USA is America’s largest fair trade organization; notably, it does not use the Fairtrade trademark, as it resigned from FLO in 2011 out of disagreement with several aspects of the FLO system. In particular, Fair Trade USA objected to the fact that FLO certification is inconsistent with regard to who can be considered a certified producer: With coffee products, certification is limited to cooperatives made up of independent farms, while with other products, like bananas and tea, workers on large farms can also receive certification. Consequently, Fair Trade USA has developed its own certification system that does not use the Fairtrade label, but rather designates products and producers with its own trademark: “Fair Trade Certified.”
The above-described organizations are just a few of the literally hundreds of nonprofit and for-profit organizations operating in the fair trade sector. Next, let us describe how the process works in bringing fair trade products to your kitchen.
How It Works: From Farm to Supermarket
There are two different types of fair trade certification: organizational recognition and producer certification.
Organizational Recognition
To become a fair trade vendor or brand and obtain the right to use one of the authorized trademarks or labels, importers and vendors are certified by national fair trade organizations. Such brands are recognized as trading only products from authorized suppliers who, in turn, buy from farms that pay their workers a fair wage and follow sustainable practices. When you see a product in a supermarket or store that is labeled fair trade, it indicates that the brand has sought and obtained certification from a national Fair Trade organization.
Producer Certification
Producers, in fair trade terms, usually refer to cooperatives of independent farms; however, in the case of particular products, the farms and farm workers themselves may be certified. Producers gain Fair Trade or Fairtrade certification from independent certification organizations. FLO-CERT, which provides Fairtrade certification for farmers in more than 70 countries, is the largest certifying organization in the world. 7
Now let us look more closely at the different operators in the fair trade supply chain, working backward from your local retailer all the way to the farm workers at the other end.
Retailers
Any local retailer, whether it is a supermarket, boutique, or coffee shop, can sell Fair Trade or Fairtrade products. As noted above, the brands and products themselves must be authorized to use one of the recognized labels or trademarks, but any store or shop that buys legitimate products at wholesale is free to resell them to consumers any way it pleases. Note, in particular, that the local retailer is under no obligation to sell the products at any given price or to return any of its revenues or profits directly to producers in the exporting country. What this means in practice is that, some retailers, aware that a small percentage of affluent consumers is desirous of socially responsible products, will simply charge a very high premium for the fair trade products. The profits generated by such high prices are purely for the retailer alone. Thus, a consumer who pays a high price for a fair trade product, under the impression that this premium will go directly to the producers or farm workers, is somewhat misguided. Indeed, as we will see, some portion of these high prices is indirectly returned to the farmers, but in most cases, the amount is less than consumers would expect.
Vendors, Brands, and Importers
Companies that wish to market their products as fair trade and feature a certification label or trademark (such as “Fairtrade” or “Fair Trade Certified”) on their packaging must conform to the standards of one of the national certification authorities. Essentially, this means they must buy their product from a certified importer or directly from one of the certified exporting cooperatives. Fair trade importers must pay a minimum price of \$1.20/pound for Arabica beans or \$1.05 for Robusta beans. This minimum price guarantee is one of the essential features of the fair trade concept.
Exporting Cooperatives
In the coffee sector, there are more than 300 exporting cooperatives in over 20 coffee-exporting nations. Cooperatives are certified by an international certification authority, which in most cases means FLO-CERT. Cooperatives buy their coffee from small, independent farms that adhere to fair trade principles, meaning that workers are paid fairly and that environmental standards are followed. Fair trade coffee is not required to be fully organic, though growers may use organic farming methods if they wish; however, limits are placed on the use of pesticides and herbicides.
The cooperative has the responsibility of visiting the individual farms to make sure that they are complying with standards. The trouble is, according to some farmers, that cooperatives do not always enforce international fair trade standards. Allegedly, the crops from farmers who bribe fair trade cooperatives to be lax with their inspections are mixed in with those from farmers that are truly committed to fair trade practices.
The cooperative consolidates its purchases and sells the bulk coffee to certified importers in developing nations. It is the cooperative that is guaranteed the minimum price maintained by the fair trade system. Note that most cooperatives are unable to sell all of their coffee as fair trade due to insufficient demand, so roughly half to two-thirds of their coffee is sold without a special label. Cooperatives are required to use their profits to engage in social projects, such as building schools or athletic fields for farm workers.
Farmers
In order to sell their coffee to fair trade exporting cooperatives, farmers must agree to limit their use of child labor, GMOs, herbicides, and pesticides. Farmers are not guaranteed a minimum price for their coffee.
Fair Trade Social Projects
Most fair trade organizations, including Fair Trade USA and FLO, promote social and economic development projects in the farmers communities. One of the principal elements of the fair trade concept is the requirement that a portion of each cooperatives earnings must be invested locally in projects to benefit the farmers, e.g., building schools, hiring teachers, funding for womens empowerment groups, and/or investment in healthcare. Farmers are taught how to lobby large international organizations and demand fair prices for their labor, and children are encouraged—sometimes required—to go to school rather than to work. Fair Trade USA requires that all its farmers have access to doctors and affordable medical treatment in case of illness or injury. Projects are also funded to help protect the environment, for example, through clean water initiatives, training on ways to reduce pesticides and herbicides, education about crop cycling, and funding for reforestation.
One problem with fair trade social projects is that their effects are extremely difficult to quantify. As of 2013, no universal metric had yet been developed to measure the impact that fair trade projects actually have on the developing world. Moreover, it has been alleged that many cooperatives devote all of their profits (if they make any) to social projects, leaving them unable to pay higher cash prices to their farmers. The farmers are thus left with social projects of arguable utility rather than the higher cash prices for their crops that many of them might have preferred. Thus fair trade organizations have come under fire for allegedly making promises they cannot keep.
Fair Trade and the Global Coffee Market
The rise of the fair trade coffee market provides an interesting case study on the interplay between international politics and the global economy. Although coffee is the world’s second-most traded commodity, after petroleum, the global coffee market has been subject to periodic boom and bust periods; when prices are low, living conditions become abject for the world’s millions of coffee farm workers.8 In response to this problem, the first International Coffee Agreement was signed in 1962 to impose export quotas and set international prices for coffee as a means of protecting the world’s coffee farmers from rollercoaster market swings in coffee prices.9 By 1989, however, the arrival of new coffee-producing nations on the market, compounded with a change in consumer tastes favoring Arabica coffees, led to the demise of the quota system; this in turn led to a global collapse in prices as farmers were faced with a worldwide coffee glut. The devastating impact on the livelihood of farmers across the developing world was one of the driving motivations behind the creation of the first fair trade cooperatives and marketing organizations, such as Holland’s Max Havelaar, which were intended to provide stable prices so that farmers would be less vulnerable to volatile world markets.
By 2002, however, the Wall Street Journal reported that an oversupply of coffee beans had once again driven coffee prices to an all-time low, pushing many farmers out of business.10 This second collapse of world coffee prices was estimated to affect 125 million people internationally, and most farmers were again at the mercy of a volatile market, without recourse. In areas where coffee is grown, few other legal crops are as profitable. The collapse of the global coffee market was relatively painless for consumers: The price of coffee declined disproportionately in developed-world supermarkets. And yet, in the midst of this market turbulence, there is some evidence that farmers that had signed on with fair trade cooperatives enjoyed a relatively stable price for their goods throughout the market collapse.11
Fair trade had grown from humble origins to the point where it could be claimed that it was having a major impact on global coffee production. By 2009, fair trade coffee had become a \$1.8 billion market.12
Coffee Social Responsibility: The Starbucks Example
As America’s largest coffee importer, Starbucks was lobbied early on to sell fair trade coffee. In 1999, Starbucks began working with FLO and TransFair USA to buy and sell Fairtrade certified products and launched the first official sales of certified coffee in 2000.13 Thereafter, Starbucks established the Coffee and Farmer Equity (CAFE) Practices buying guidelines to delineate a specific set of rules and regulations pertaining to ethically sourced coffee, with the goal of eventually ensuring that all of Starbucks’s imported coffee would qualify as ethically sourced (though relatively little of that would be Fair Trade certified). The four main areas on which the CAFE guidelines focused were economic accountability, social responsibility, product quality, and economic leadership. An independent body, Scientific Certifications Systems, oversees the evaluation of CAFE products.
In 2009, Starbucks announced that, with cooperation from FLO and TransFair USA, it would promote a \$20 million loan program to support small-scale farmers in the developing world.14 Labeled the Small Farmer Sustainability Initiative (SFSI), the program was designed to promote responsible trading practices throughout the coffee industry. Also in 2009, Starbucks became the largest purchaser of Fair Trade certified coffee in the world, purchasing 40 million pounds of Fair Trade certified crops from vendors on three continents. By 2012, ninety-three percent of the coffee that Starbucks sold worldwide was ethically sourced (according to Starbucks)—ninety percent of which was certified through CAFE practices. The company has announced that its goal is to ensure that one hundred percent of its coffee products are ethically sourced by 2015.
One goal of the SFSI program was to streamline the process of small-scale farmers applying to become a part of the fair trade program. Starbucks and FLO-CERT developed a single-audit system so that farmers applying for Fairtrade certification and Farmer Equity Practices verification could become Starbucks vendors in one step. The streamlined process was intended to eliminate fifteen to thirty percent of the cost of auditing expenses for coffee farmers in the developing world.
Although Starbucks has acquired a reputation for a strong commitment to CSR, having appeared on the list of Ethisphere Magazine’s most ethical international companies for four consecutive years, critics have pointed out that Starbucks’s promotion of their CAFE program has misled American consumers. Many Starbucks customers have come to believe that all of Starbucks’s coffee is fair trade, while it actually only accounts for about 6% of Starbucks’s coffee sales.
Good Coffee, Bad Coffee? Evaluating Criticisms of Fair Trade
Fair trade coffee is often held up as one of the great success stories of responsible consumerism. Supporters of the fair trade movement argue that it promotes a more direct trade system, fosters long-term economic improvement in developing nations, provides living wages, strengthens labor protection for artisans and farmers in impoverished communities, and provides access to otherwise unreachable global markets.
Critics of fair trade argue that it constrains the beneficial flexibility of the free market and that most of the social projects promoted by fair trade are such small-scale endeavors that they are not sufficiently influential. Rather than supporting and protecting the interest of small-scale farmers, critics contend that fair trade does little more than play on “developed-world guilt.” Critics argue that staying in the fair trade system raises costs for farmers who sometimes experience a decrease in profits due to a decrease in yield, and who also must adhere to labor rules that require them to hire workers rather than employing their own children or offering “work for trade” within their community. Some researchers have found that fair trade labeling cooperatives are able to turn a profit while farmers, originally enticed by the promise of a higher per-pound price, fail to see any significant benefits. In any event, there is no evidence that farmers on average are receiving higher income due to selling to fair trade cooperatives.
There are a number of reports and investigations that indicate that fair trade inspections are unreliable. Some of these criticisms have come from former insiders, such as Christian Jacquiau and Paola Ghillani, formerly associated with Fairtrade Labelling Organizations. 15 In 2006, a Financial Times investigation of fair trade in Peru revealed that out of ten mills that claimed to sell fair trade coffee, all ten had sold uncertified coffee as certified. It also found that workers on fair trade farms were often paid beneath the minimum wage, in violation of fair trade standards.
Ironically, many of these criticisms began surfacing just as fair trade was starting to achieve widespread acceptance from consumers and retailers. In many cases, it appears that retailers believe they can increase profits if they jump on the fair trade bandwagon. Arguably, though, such retailers have a tendency to exaggerate the benefits of fair trade. Whole Foods, for example, has boasted that five percent of the money from coffee sales goes to growers. Investigation revealed, however, that the five percent figure merely reflected the price that Whole Foods paid its coffee unit. In Europe, supermarket giant Tesco was reportedly charging upwards of an additional \$3.46 for its fair trade coffee, while the farmers of that coffee only received 44 cents of that premium.
Regardless of its real impact on producers and farmers in developing countries, the fair trade movement is already beginning to change the ways that consumers in rich countries think about shopping and consuming. In 2006, Media, Pennsylvania, became the first US town to become fair trade certified by successfully converting a critical percentage of all goods it purchases to those certified by third-party certification schemes.16 By 2013, approximately thirty-two other US towns had followed suit. In Europe, this process is much further advanced, with hundreds of towns and municipalities having received certification. The success of fair trade certification has spawned a number of similar certifications, of which the best known is the Rainforest Alliance, which certifies food products as grown in a sustainable fashion.
Regardless of the ongoing controversy about its legitimacy, it appears that fair trade certification is here to stay.
Topic for Debate: Should a Specialty Coffee Chain Sell Only Fair Trade Coffee?
In the fictional case that is the topic for this chapter’s debate, a small specialty coffee chain, known as World Coffee, Inc., is considering switching over to a 100% fair trade brew for its coffee and tea products.
World Coffee is a chain of eleven stores in the greater New York metropolitan area, with five in Manhattan, three in Brooklyn, two in Long Island, and one in Hoboken, New Jersey. The founder, Wendy Mueller, opened her first store in the trendy Tribeca neighborhood of Manhattan in 2004 and quickly attracted a devoted following due to its use of extremely high-quality coffee, which was complemented with a 100% organic product line—organic milk and cream for the coffee and tea, organic sugar and honey as sweeteners, and pastries and baked goods made from 100% organic ingredients. Building on its initial success, the chain quickly expanded to its current size and each of its store operations is highly profitable. Wendy has a full-time executive staff of four people and the stores employ an additional ten store managers and fifty to sixty part-time employees.
A potential franchise partner from San Francisco, Blake Morton, has approached Wendy and is proposing opening an additional twenty to thirty stores in the western United States, especially in California, Oregon, and Washington.
However, her potential partner has proposed a significant change to World Coffee’s operations: They would switch over to 100% fair trade coffee and tea.
Wendy is concerned because she is aware that there has been a lot of criticism of fair trade as a system that promises more than it delivers. She is also concerned that the supply is more limited and that she will have to choose lower quality coffees. Additionally, she feels that it would be hard to source all her coffee from Fair Trade providers unless she raises her coffee prices by twenty-five to fifty cents per cup, and she was already worried that they were too high to begin with.
Despite this, Blake Morton is a vocal supporter of fair trade and is convinced that a 100% fair trade concept will help distinguish her from competitors and drive business to the store.
Wendy proposes that she and Blake research the topic and present their arguments to a jury composed of five people whom Wendy considers as New York’s top experts in running and expanding socially responsible businesses. Blake agrees to Wendy’s list and they both begin to prepare their arguments.
You will be assigned either to the team supporting Wendy’s position or the team supporting Blake’s position.
The debate positions may be formulated as follows:
Affirmative
World Coffee should move to 100% fair trade.
Possible Arguments
• Customers are attracted to the fair trade concept.
• Despite the increased cost to consumers and reports that fair trade is not always as transparent as it should be, every little bit helps. If we wait for a perfect system, we will never help poor farmers.
• Fair trade raises awareness that it is possible to help citizens in developing countries.
• Fair trade products are more sustainable than conventional products.
• Fair trade helps put an end to unjust and unsustainable practices in global trade.
• If the coffee shop does a good job of promoting why their prices have increased and gives consumers a reason to pay more, they will.
Negative
World Trade should not adopt a 100% fair trade policy.
Possible Arguments
• Fair trade is not all that it is cracked up to be: It is a marketing gimmick aimed at socially conscious consumers.
• It would be more ethical to buy directly from known farmers, regardless of certification.
• Fair trade coffee is not necessarily organic.
• Our employees and other stakeholders are our first concern, and if we charge too much for coffee, we will find ourselves out of business.
• We can still make fair trade coffee available to customers who want it, but we do not have to offer it exclusively.
• If fair trade improves its certification procedures, we can increase our support later.
• Because fair trade may benefit retailers more than suppliers, it actually adds to the problem by creating a false sense of philanthropy.
Readings
8.1 Benefits of Fairtrade
“Benefits of Fairtrade.” Fairtrade International, accessed Nov. 25, 2014. www.fairtrade.net/benefits-of-fairtrade.html
For producers, Fairtrade is unique in offering four important benefits:
1. Stable prices: For most products there is a Fairtrade Minimum Price that aims to cover the costs of sustainable production—even when world market prices fall.
2. A Fairtrade Premium: The Premium helps producers to improve the quality of their lives. It is paid on top of the agreed Fairtrade price, and producers decide democratically how to use it. Typically they invest it in education, healthcare, farm improvements, or processing facilities to increase income.
3. Partnership: Producers are involved in decisions that affect their future. Fairtrade certified producers jointly own and manage Fairtrade International. Through Fairtrade International’s Board, its Committees, and consultation processes, producers can influence prices, premiums, standards, and overall strategy.
4. Empowerment of farmers and workers: This is a goal of Fairtrade. Small farmer groups must have a democratic structure and transparent administration in order to be certified. Workers must be allowed to have representatives on a committee that decides on the use of the Fairtrade Premium. Both groups are supported by Fairtrade International to develop their capacity in this area.
With Fairtrade, Everyone Wins
Consumers
Shoppers can buy products in line with their values and principles. They can choose from an ever-growing range of great products. By buying into Fairtrade, consumers support producers who are struggling to improve their lives.
Traders/Companies
Since its launch in 2002, the Fairtrade mark has become the most widely recognised social and development label in the world. Fairtrade offers companies a credible way to ensure that their trade has a positive impact for the people at the end of the chain.
Environment
Fairtrade rewards and encourages farming and production practices that are environmentally sustainable. Producers are also encouraged to strive toward organic certification. Producers must:
• Protect the environment in which they work and live. This includes areas of natural water, virgin forest, and other important land areas and dealing with problems of erosion and waste management.
• Develop, implement, and monitor an operations plan on their farming and techniques. This needs to reflect a balance between protecting the environment and good business results.
• Follow national and international standards for the handling of chemicals. There is a list of chemicals that they must not use.
• Not, intentionally, use products that include genetically modified organisms (GMO).
• Work out and monitor what affect their activities are having on the environment. Then they must make a plan of how they can lessen the impacts and keep checking that this plan is carried out.
8.2 “Fair Trade in Bloom”
Downie, Andrew. “Fair Trade in Bloom.” New York Times. October 2, 2007. http://www.nytimes.com/2007/10/02/business/worldbusiness/02trade.html.
8.3 “Voting with Your Trolley”: Can You Really Change the World Just by Buying Certain Foods?
“Food Politics: Voting with Your Trolley.” The Economist: Special Report. December 7, 2006. http://www.economist.com/node/8380592.
8.4 “The Problem with Fair Trade Coffee”
Haight, Colleen. “The Problem with Fair Trade Coffee.” Stanford Social Innovation Review. Summer 2011. http://www.ssireview.org/articles/entry/the_problem_with_fair_trade_coffee.
…As the name implies, Fair Trade has sought not only to protect farmers but also to correct the legacy of the colonial mercantilist system… To its credit, Fair Trade USA has played a significant role in getting American consumers to pay more attention to the economic plight of poor coffee growers. Although Fair Trade coffee still accounts for only a small fraction of overall coffee sales, the market for Fair Trade coffee has grown markedly over the last decade, and purchases of Fair Trade coffee have helped improve the lives of many small growers.
Despite these achievements, the system by which Fair Trade USA hopes to achieve its ends is seriously flawed… Among the concerns are that the premiums paid by consumers are not going directly to farmers, the quality of Fair Trade coffee is uneven, and the model is technologically outdated…
The primary way by which FLO and Fair Trade USA attempt to alleviate poverty and jump-start economic development among coffee growers is a mechanism called a price floor, a limit on how low a price can be charged for a product. As of March 2011, FLO fixed a price floor of \$1.40 per pound of green coffee beans…
It is these requirements and pricing structure that create a quality problem for Fair Trade coffee… A simple example illustrates this point. A farmer has two bags of coffee to sell and there is a Fair Trade buyer for only one bag. The farmer knows bag A would be worth \$1.70 per pound on the open market because the quality is high and bag B would be worth only \$1.20 because the quality is lower. Which should he sell as Fair Trade coffee for the guaranteed price of \$1.40? …To maximize his income, therefore, he will choose to sell his lower quality coffee as Fair Trade coffee…
…Membership in a cooperative is a requirement of Fair Trade regulations… Premiums are retained by the cooperative and do not pass directly to farmers. Instead, the farmers vote on how the premium is to be spent for their collective use. They may decide to use it to upgrade the milling equipment of a cooperative, improve irrigation, or provide some community benefit, such as medical or educational facilities.
Fair Trade USA is a nonprofit, but an unusually sustainable one. It gets most of its revenues from service fees from retailers. For every pound of Fair Trade coffee sold in the United States, retailers must pay 10 cents to Fair Trade USA. That 10 cents helps the organization promote its brand, which has led some in the coffee business to say that Fair Trade USA is primarily a marketing organization…
Another challenge for FLO is the issue of transparency in business dealings… Records kept by cooperatives have shown that premiums paid for Fair Trade coffee are often used not for schools or organic farming but to build nicer facilities for cooperatives or to pay for extra office staff…
FLO also provides incentives for some farmers to remain in the coffee business even though the market signals that they will not be successful. If a coffee farmers cost of production is higher than he is able to obtain for his product, he will go out of business. By offering a higher price, Fair Trade keeps him in a business for which his land may not be suitable.
Synthesis Questions
1. After studying this chapter, are you more likely or less likely to buy fair trade coffee?
2. Is there another way of achieving the objectives of improving the lives of developing-country farmers and producers than the Fair Trade approach? Describe at least one option.
3. Why do consumers buy Fair Trade products? List a few reasons and analyze each of them.
Endnotes
1. “About Us,” TenThousandVillages.com, accessed October 5, 2013, http://www.tenthousandvillages.com/about-us.
2. “Sixty Years of Fair Trade: A Brief History of the Fair Trade Movement. Nov. 2006, accessed October 5, 2013, www.european-fair-trade-association.org/efta/Doc/History.pdf.
3. What Is Fair Trade,” Fair Trade Resource Network. accessed October 6, 2013, http://www.fairtraderesource.org/uploads/2007/09/What-is-Fair-Trade.pdf, 2.
4. What Is Fair Trade: Impact,” FairTrade USA, accessed October 6, 2013, http://fairtradeusa.org/what-is-fair-trade/impact.
5. “Who We Are,” World Fair Trade Organization, accessed November 25, 2014, www.wfto.com/about-us/who-we-are.
6. “About Us,” FLO-CERT, accessed October 5, 2013, www.flo-cert.net/flo-cert/9.html.
7. “About Us,” FLO-CERT.
8. Eric Goldschein, “11 Incredible Facts About the Global Coffee Industry,” Business Insider, November 14, 2011, http://www.businessinsider.com/facts-about-the-coffee-industry-2011-11?op=1.
9. Mary Bohman and Lovell Jarvis, “The International Coffee Agreement: A Tax on Coffee Producers and Consumers,” Department of Agricultural and Resource Economics University of California, Davis, 1999, http://escholarship.org/uc/item/6s27s2kb.
10. Peter Fritsch, “An Oversupply of Coffee Beans Deepens Latin America’s Woes,” The Wall Street Journal, July 8, 2002, http://online.wsj.com/article/SB1026078773964234000.djm.html .
11. Diane Cameron, Richard M. Locke, and Cate Reavis, “Fair Trade Coffee: the Mainstream Debate,” MIT Sloan Management, August 27, 2010, https://mitsloan.mit.edu/LearningEdge/CaseDocs/08%20069%20Fair%20Trade%20Coffee%20The%20Mainstream%20Debate%20Locke.pdf, 2, 12.
12. Alain de Janvry,, Craig McIntosh and Elisabeth Sadoulet. “Fair Trade and Free Entry: TheDissipation of Producer Benefits in a Disequilibrium Market.” University of California at Berkeley. July 2010, accessed Nov. 25, 2014, https://gspp.berkeley.edu/assets/uploads/research/pdf/FairTrade_July10.pdf
13. Company Timeline,” Starbucks, accessed May 4, 2014, http://www.starbucks.com/assets/ba6185aa2f9440379ce0857d89de8412.pdf.
14. FairTrade USA, “Starbucks, Transfair USA and Fairtrade Labelling Organizations International Join in Support of Small-Scale Coffee Farmers Through a \$20 million Loan Program,” press release, April 16, 2009, www.fairtradeusa.org/press-room/press_release/starbucks-transfair-usa-and-fairtrade-labelling-organizations-international.
15. Steve Stecklow and Erin White, “At Some Retailers, ‘Fair Trade’ Carries a Very High Price,” The Wall Street Journal, June 8, 2004, http://online.wsj.com/article/0,,SB108664921254731069,00.html.
16. John Roman, “Media, PA Is First Fair Trade Town in US,” Organic Consumers Association, July 10, 2006, www.organicconsumers.org/articles/article_1061.cfm. | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/01%3A_Chapters/1.08%3A_Fair_Trade.txt |
Source: Weronika, (CC-BY 2.0, 2013) Figure 9.1 A relative of one of the workers in a clothing factory at Rana Plaza, Bangladesh, holds up the picture of his missing family member, presumed dead.
The Importance of Sweatshops
On April 24, 2013, at Rana Plaza on the outskirts of Dhaka, Bangladesh, a building containing apparel factories collapsed, trapping and killing over 1,100 employees. It was not only the worst industrial disaster in the history of the garment industry, it was also the worlds most fatal industrial building collapse. News reports soon emerged that the factory owners had ignored ominous warning signs, such as visible cracks in the wall, and had illegally added several stories to the top of the building, creating a weight the building could not bear. Many of the factories operating in the building were producing apparel for well-known Western brands, such as Walmart, Joe Fresh, and Mango.
Rescue workers struggled for over a week to reach trapped survivors, while hospitals tended to the over 2,500 workers who had escaped, many with severe injuries. Survivors told heart-rending tales of having lost mothers and sisters who had worked in the same factories. The deaths of so many innocent workers created a firestorm of controversy in Bangladesh and around the world. Accusations and recriminations were leveled at corporations and government officials. A period of intense and profound soul-searching ensued for the global fashion companies that made substantial use of outsourced factory labor in Bangladesh. Within a few months, two major initiatives were announced, one American and one European, to increase safety and accountability in Bangladeshi factories.
In this chapter, we will explore the complex issues underlying the outsourcing of manufacturing and its relationship to sweatshops and child labor. While the horrific example of Rana Plaza might lead one to assume that sweatshops are always a bad thing, a closer examination reveals the limitations of a simplistic view. In fact, Bangladesh relies heavily on outsourced apparel manufacturing for the well-being of its citizens. Clothing factories employ over 3 million Bangladeshi citizens and the country obtains nearly 80% of its export earnings from the apparel sector.1 An outright ban on outsourced manufacturing would leave many poor Bangladeshis without a job. Although such jobs may not seem desirable from the perspective of citizens of industrialized countries, in developing countries these kinds of factories often pay more than the average salary.
In this chapters debate section, we will ask ourselves what is the proper attitude of a major global brand toward manufacturing in a country like Bangladesh, which has suffered from a spate of manufacturing disasters in recent years. The company we will consider is Disney, which is known for producing toys, clothes, and movies aimed at children. Disney has been accused of producing goods in sweatshop factories that employ child labor. Obviously, Disney cannot afford to become known as a company that is unconcerned with the rights of children. What should they do? In order to discuss this issue, we first need to come to a more sophisticated understanding of sweatshops and their benefits and disadvantages.
Understanding Sweatshops: History and Definitions
The term sweatshop refers to a factory that is guilty of some sort of labor abuse or violation, such as unsafe working conditions, employment of children, mandatory overtime, payment of less than the minimum wage, unsafe working conditions, abusive discipline, sexual harassment, or violation of labor laws and regulations. The US Government Accounting Office has chosen to define a sweatshop as any manufacturing facility that is guilty of two or more of the above types of labor abuses.2 However, it is important to understand that the term sweatshop is not just a legally defined term but a word that has entered the general lexicon and is used broadly.
Historically, the term was first used in association with the manufacture of articles of clothing and apparel. Shortly after the beginning of the industrial revolution, which began in the United Kingdom at the end of eighteenth century and the beginning of the nineteenth, a rise in living standards led to a much greater consumer demand for clothing. Although the raw materials of clothing—fabric, yarn, buttons, and thread—could be produced efficiently in large, mechanized factories, the same was not the case for the final garment itself. To the present day, it has remained difficult to mechanize the sewing process involved in making clothing: The manual dexterity of a human being has always been needed in addition to a simple sewing machine. Consequently, the manufacturing of clothing has remained labor intensive relative to other industries.
Another particularity of the apparel industry is that it is difficult to predict demand for articles of fashion. In any given year, some styles and colors will be wildly successful, while others will prove unpopular and need to be sold at a discount (hence the ubiquitous nature of discount sales of clothing). Given high labor costs and unpredictable demand, garment manufacturers turned to a system built on outsourcing production to middlemen who would then parcel out production to a number of small workshops. The middlemen were tasked with making sure that production deadlines were met, so they put pressure on the workshops and became known as sweat-ers, meaning that they made the workshops and their employees sweat. In time, these high-pressure workshops became known as sweatshops.
By the 1830s, the abuse of workers in sweatshops had become a topic of social concern, and the United Kingdom passed its first Factory Act, which was then amended some 7 times by 1878.3 In 1844, Friedrich Engels, who would attain fame as Karl Marxs intellectual partner and one of the founders of Marxism, wrote a critique entitled The Condition of the Working Class in England. As industrial production developed in the United States, sweatshops also became a major American political issue. Many of the Abolitionists who became famous for their staunch opposition to American slavery also fought against sweatshops, considering them a form of human oppression akin to slavery. By the 1890s, a number of groups sprung up to try to alleviate and control sweatshop conditions.
Origins of the Anti-Sweatshop Movement: The Triangle Shirtwaist Factory Fire
By the first years of the twentieth century, New York City had become a center for apparel manufacturing and, consequently, for sweatshops as well. Tens of thousands of immigrant workers toiled in the sweatshops of an area that is still referred to as the Garment District, the heart of which lies along Seventh Avenue in midtown Manhattan.
By 1900, a number of local unions allied to form the International Ladies Garment Workers Union (ILGWU), the first major attempt to unionize sweatshop labor in the United States. In 1909, approximately 20% of the workforce of the Triangle Shirtwaist Factory walked out in the first major strike in the garment sector.4 As the strike wore on and the owners of the Triangle Shirtwaist Factory learned of attempts to unionize the remaining workers, the owners locked out the entire staff. At a series of public meetings at which female workers spoke movingly of their deplorable working conditions, a mass walkout ensued, in which 20,000 out of 32,000 total shirtwaist workers walked off the job, giving this action the name of the “Uprising of the 20,000.” While a few shops accepted unions and most agreed to improve conditions, the Triangle Shirtwaist Factory did not accept a union. Shortly afterwards, in 1910, 60,000 workers walked off the job in an action that became known as the “Great Revolt.” The dispute was mediated by legendary jurist Louis Brandeis, who later became known as one of the Supreme Courts greatest justices.5
Despite the central role of the Triangle Shirtwaist Company in these actions, and despite the promises of improvement made pursuant to Brandeiss mediation, it soon became clear that not enough had yet been accomplished. On March 25, 1911, a fire broke out in the Triangle Shirtwaist Company factory located next to Washington Square Park.6 With several of the main exits locked to prevent employees from stealing, only one exit was available and it was soon blocked by flames. Many workers succumbed to the heat and smoke while others, trapped by the growing fire, stepped out onto an eighth floor ledge, and when the heat became unbearable, jumped off. Dozens of young women fell to their deaths on the pavement below, creating a horrific image that would transform the entire industry. It was the worst industrial accident in the history of the United States.
In the wake of the Triangle Shirtwaist Fire, a number of reforms were promptly undertaken in New York, with over sixty laws dealing with fire safety and labor rights passed by the state legislature in the first two years after the fire. These reforms were echoed and amplified throughout the United States and around the world in the decades that followed. In 1919, the International Labour Organization was created to protect worker rights.7 In 1937, the United States passed an important national statute on union and labor rights, the National Labor Relations Act.8 Despite these and other reforms, however, sweatshops stubbornly refused to disappear. In 1994, the US Government Accounting Office noted that thousands of sweatshops continued to operate in the United States.9 Rather than disappearing, the sweatshop problem would follow the international path of globalization and spread around the world.
Modern Sweatshop Scandals: Kathie Lee Gifford, Nike, Saipan, and Bangladesh
Globalization is a term that refers to the growing interconnection of the worlds economies. The globalization trend greatly picked up speed after international moves to lower import tariffs were instituted by the General Agreement on Trade and Tariffs (GATT) in 1947 and even more so after the GATT system was institutionalized in the World Trade Organization (WTO) in 1995. At the corporate level, one manifestation of globalization is foreign outsourcing, the practice of moving manufacturing operations to low-cost countries. Fashion and apparel companies were among the first to take advantage of the benefits of outsourcing. Throughout the period from 1970 to the present, employment in American apparel factories dropped sharply as companies moved production to countries like Indonesia, Vietnam, China, Mexico, and the Dominican Republic.
The outsourcing movement was accompanied by increasing reports of sweatshop abuses. As a result, a number of nongovernmental organizations (NGOs) became involved in anti-sweatshop activities. One of these was an American organization called the National Labor Committee, headed by labor activist Charles Kernaghan. Kernaghan was devoted to ferreting out instances of sweatshop abuse in foreign factories producing for American brands, and then publicizing the abuses in an effort to shame the companies into changing their practices. Not surprisingly, both the factories and their American clients were quite reluctant to share information with Mr. Kernaghan. He therefore developed a number of sleuthing tactics; for example, he would surreptitiously trail the garbage trucks that picked up the factorys waste, following the truck to the local dumpsite. Later, displaying remarkable commitment to his job, he would sneak in and rummage through the waste, looking for discarded office files. When he found the factorys production records, often minutely described in spec sheets, he was able to determine who the client was and how much the client was paying for the labor cost included in assembling a particular garment. Another technique employed by Kernaghan was to find the local food stands where workers would go for lunch or coffee. There he would seek to engage the workers in conversation about the factory. This technique had to be employed with great discretion because, if a factory owner or foreman heard that a worker was collaborating with Kernaghan, there was a great likelihood the worker would be punished or fired.
After several years of watching his reports go ignored by the mainstream media, Kernaghan finally broke a story in 1993 that would transform the public image of American outsourcing. Kernaghan discovered that a fashion line produced for Walmart under the label of a prominent American television personality, Kathie Lee Gifford, was manufactured in Guatemala in a factory that used child labor and engaged in a number of worker abuses. Although Kernaghan expected that this report would receive little coverage, he was unwittingly helped by Gifford herself, who went on the air during her popular morning show, Live with Regis and Kathie Lee, to tearfully deny the allegations. In the United States as in many other countries, any incident involving a media celebrity becomes fodder for the popular press. Kernaghan found himself at the center of a news storm. As Kernaghan and Gifford exchanged accusations and denials, the issue of sweatshop abuses came to the fore. Gifford eventually promised publicly to ensure that employment of children would cease and worker rights would be respected, and the controversy abated. Kernaghan has stated that, in the end, Gifford changed nothing of substance.
Throughout the 1990s, a number of other sweatshop-related abuses came to light in factories used by American brands. Several of these involved the island of Saipan, a small American protectorate in the Pacific. A number of factory owners discovered that since Saipan is technically American territory, clothing produced in Saipan could enter the United States duty-free and carry the label “Made in America.” Since Saipan is much closer to Vietnam and the Philippines than to the United States, a number of these factories recruited Vietnamese and Filipino natives as factory workers. Upon their arrival in Saipan, however, some of these workers were exposed to flagrant human rights abuses and, in the worst of cases, outright slavery. In one notorious case, workers were literally imprisoned in the factory and forced to work without pay. Eventually, these abuses were revealed and US prosecutors filed charges against factory owners, some of whom were sentenced to substantial prison sentences.
In the early 1990s, one of Americas most prominent footwear brands, Nike, also came under attack as reports emerged from Indonesia and Vietnam of worker abuse. In Vietnam, a young female factory employee was working on basketball shoes when her machine exploded and sent a bolt through her heart. The American cartoonist Garry Trudeau began featuring a series of strips satirizing Nikes sweatshop factories in his popular newspaper cartoon Doonesbury. At first, Nike refused to accept responsibility, pointing out that Nike had never manufactured its own footwear and apparel. Nikes contracts with its sourcing factories required the factories to obey labor regulations and, in Nikes view, this meant that any abuses were the factories responsibility. However, by 1998, the continuing negative publicity obliged Nike to reverse course by instituting a strict code of conduct for its factories.
Through the efforts of a crusading Secretary of Labor Robert Reich, the Clinton administration sought to leverage the power of the bully pulpit available to the US presidency. In 1995, the Clinton administration announced the formation of the Apparel Industry Partnership, a government–industry collaboration aimed at reducing instances of sweatshop abuse. Companies who were able to establish that they had produced their items in sweatshop-free environments would be allowed to add a special label in their clothes: “No Sweat.” It seems this approach was ill-advised, as no companies ever made use of it, perhaps because many people would be disconcerted to find a reference to sweat in their garments.
In 1998, Americas college students created US Students Against Sweatshops (USAS), which has proven to be an influential public interest group. USASs initial goal was to convince American universities to eliminate sweatshops from the sourcing of college apparel, such as the sweatshirts and T-shirts bearing university logos that are commonly sold in campus stores and bookshops. Around the same time, a group of large American brands announced the creation of the Fair Labor Association (FLA), a group that set standards for certifying American brands as sweatshop-free if they submitted themselves to a regime of regular inspections. The FLA was viewed with suspicion by many antisweatshop activists and NGOs, in part because the FLA did not accept membership from unions, and also because it was felt that FLAs principal approach, to reward corporations with certification for a few years of minimal inspections, was insufficient to truly eliminate sweatshop abuses. As a result, union groups and the USAS led the way in creating a rival group, the Worker Rights Consortium (WRC), which took a different approach. The WRC investigated reports of abuse and published its findings.
In light of continued scrutiny from groups like the WRC, the USAS, the National Labor Committee, and other international groups such as the Clean Clothes Campaign, most large apparel brands developed and publicized their own internal codes of conduct for suppliers. Such codes of conduct were contractually imposed on all suppliers and required that factories comply with all local labor laws, refrain from employing children, and maintain safety programs. In addition, most brands began to require that factories make themselves available for inspections to make sure that they were complying with the standards set forth in the codes of conduct. A number of inspection companies sprang up to service the needs of the corporations and groups of young inspectors soon scanned the globe, moving from factory to factory, checking them for fire violations, reviewing records to make sure that rules on overtime were respected, and so forth.
Despite all these efforts, reports of violations continued to be heard. The American consumer seemed to have wearied of the sweatshop issue to some extent, and companies like Walmart and Nike, which had often been accused of sweatshop abuses, saw their sales and stock valuations continue to rise. Many companies began to focus more on environmentalism and anti–global warming issues, and a number of brands began to require that their supply factories obtain some sort of environmental certification, such as the Bluesign certification that was established in Germany under the auspices of SGS, the worlds largest inspection company. Then, in 2012 and 2013, a horrific series of accidents—eerily reminiscent of the Triangle Shirtwaist fire that had occurred a century before—reminded the worlds consumers that the sweatshop issue was still with us.
In 2012, a fire broke out at an apparel factory in Pakistan, killing some 270 Pakistani workers. Among the western companies sourcing from that factory were the UK retailer Tesco and the German apparel brand Kix. Kixs offer of compensation to the victims families of \$2,000 per fatality was viewed by many Pakistanis as insulting. Then, just a few months later, at the Tazreen Fashions factory in Dhaka, Bangladesh, another 112 factory workers perished in a fire. Again, it was discovered that well-known western brands such as Walmart, Disney, and the Gap has sourced products from the factory. The worlds attention was squarely focused on Pakistan and Bangladesh when the building collapse at Rana Plaza in Bangladesh became the worst industrial catastrophe in the history of apparel manufacturing.
The Other Side of the Story: In Praise of Sweatshops
In light of the above history, it might seem startling that many experts appear to accept the existence of sweatshops as something positive. Economist Jeffrey Sachs, who is perhaps the worlds foremost expert on the eradication of poverty (he was the creator of the United Nations Millennium Project to cut global poverty in half) was quoted in 1997 as saying, “The problem with sweatshops is not that there are too many, but that there are not enough.”10 What did he mean by that?
In general, economists are less disturbed by sweatshop abuses than are labor activists, but most economists would deny that this is because they are heartless or unconcerned with human rights. Rather, they concede that sweatshop abuses are both common and reprehensible, but they also believe that the benefits to the local economy from international outsourcing more than outweigh the harm. According to this point of view, sweatshops are part of the industrialization process and are an inevitable by-product of economic development. Factories in poor countries are able to attract foreign customers because local labor is cheap. As factories proliferate and employment rises, factories must begin to compete for better workers. Wages therefore increase, and factory conditions improve. With a broader tax base and greater economic growth, local governments are able to invest in the infrastructure for further development, building roads, hospitals, and schools.
Some international research studies appear to confirm the economists point of view. One study revealed that, in most countries where the presence of sweatshops had been reported, apparel factory workers actually earned more than the average national wage.11 A number of countries have passed through a manufacturing phase in which sweatshop conditions were more prevalent on their way to full industrialization and a diversified economy. Examples include the United States, Japan, and Korea. Most recently, China appears to be following a similar path, though it is still in a transition phase and reports of sweatshop abuses are still common.
Case Study: Disney in Bangladesh
The Walt Disney Corporation is one of the worlds largest entertainment conglomerates, known for its theme parks, such as Disneyland and Disneyworld; its long history of producing blockbuster animated movies from Fantasia and Snow White to The Lion King and Tangled; and its sale of licensed apparel and toys featuring famous characters from the Disney movies. Given that an important segment of Disneys target market is children, the company is especially exposed to negative publicity related to certain sweatshop abuses, in particular, the use of child labor.
After the 2011 Tazreen Fashions factory fire in Bangladesh, Disney management became concerned about the companys public relations exposure due to its sourcing operations in Bangladesh. Although Disneys apparel manufacturing was far from negligible, it still represented a very small percentage of Disneys total earnings, which came predominantly from its television, film, and theme park divisions. One commonality to the Disney-branded products was that they all relied on Disneys image as a wholesome provider of family fare. If Disney were to become tagged with accusations similar to those leveled at Kathie Lee Gifford—namely that it was the beneficiary of child labor in sweatshop conditions—the consequences could be quite devastating for Disneys public image. What would Disney do if high-school students started nagging their parents to abandon Disney vacations or to stop renting Disney movies?
Therefore, in early 2013, Disney decided to pull its manufacturing operations out of Bangladesh. That Disney departed from Bangladesh shortly before the Rana Plaza building collapse was misinterpreted by many as having been caused by the collapse, whereas Disney had actually made its decision well before the collapse. Despite this, many representatives of antisweatshop NGOs and workers rights groups condemned Disneys decision as an abdication of responsibility. In the view of such critics, Disney should have stayed behind to help remedy the problem.
Topic for Debate: Should Disney Return?
In this chapters debate section, we ask, would it more ethical for Disney to stay in Bangladesh and use its considerable reputation to help lobby for improved worker conditions at Bangladesh apparel factories?
We will assume for the purposes of this debate that the Disney Board of Directors has been pressured to reconsider its position. Two directors are preparing their presentations for an upcoming board meeting at which the issue will once again be discussed. One of the directors, whom we will call Mr. Jones, is one of the founders of an international NGO dedicated to worker rights. He was invited onto the board specifically because of his ability to speak to issues of human rights compliance in outsourcing factories. It is Mr. Joness opinion that Disney should resume operations in Bangladesh.
On the other side is a director we will call Mr. Smith, who is one of the principal shareholders of the Disney Corporation. Mr. Smith is very concerned that a return to Bangladesh would expose Disney to major financial risk, because another factory catastrophe coming after Disneys return could lead to Disneys name being tarnished. You will be asked to help one of these directors prepare their presentation at the Board meeting.
Affirmative
Disney should resume manufacturing in Bangladesh.
Possible Arguments
• Disney has sufficient prestige to help lobby for improved human rights compliance in Bangladesh.
• Disneys departure may only encourage Disneys suppliers and related parties to leave Bangladesh as well, thereby diminishing employment in Bangladesh and harming the local workers through unemployment.
• By helping support the efforts of other foreign companies sourcing in Bangladesh, Disney will learn state-of-the-art methods for working with governments and community groups to help improve worker safety, which can only serve Disney positively in the other countries where Disney sources its apparel products.
Negative
Disney should not resume manufacturing in Bangladesh.
Possible Arguments
• Disney markets products to children and families; any reports of child labor or the deaths of teenage workers in factories could be devastating to Disneys image.
• Disney should reward—with its factory contracts—those countries that are doing a good job in providing a safe working environment for its employees, free of sweatshop labor.
• Disneys departure should help create an incentive for Bangladeshi authorities to improve conditions in their factories. If no foreign buyers leave, it is too easy for them to become complacent and do little to change the status quo.
Readings
9.1 Address the Real Challenges
Posner, Michael H. “Disney and Other Big Brands Need to Address the Real Challenges to Outsourcing.” New York Times. May 2, 2013. http://www.nytimes.com/roomfordebate/2013/05/02/when-does-corporate-responsibility-mean-abandoning-ship/disney-and-other-big-brands-need-to-address-the-real-challenges-to-outsourcing.
9.2 Disney’s Decision Was Appropriate
Kanzer, Adam M. “Disney’s Decision to Leave Bangladesh was Appropriate.The New York Times. May 2, 2013. http://www.nytimes.com/roomfordebate/2013/05/02/when-does-corporate-responsibility-mean-abandoning-ship/disneys-decision-to-leave-bangladesh-was-appropriate.
9.3 Disney’s Disgrace
Foxvog, Liana, and Judy Gearheart. “Disneys Decision to Pull Out of Bangladesh Is a Mistake.” New York Times. May 2, 2013. http://www.nytimes.com/roomfordebate/2013/05/02/when-does-corporate-responsibility-mean-abandoning-ship/disneys-decision-to-pull-out-of-bangladesh-is-a-mistake
9.4 Responsibility Is Local, Not Global
Bhagwati, Jagdish. “Responsibility for Sweatshops is Local, Not Global”. New York Times. July 11, 2014. http://www.nytimes.com/roomfordebate/2013/05/02/when-does-corporate-responsibility-mean-abandoning-ship/responsibility-for-sweatshops-is-local-not-global.
Synthesis Questions
1. When you buy clothing do you check the inside label to see where the item was manufactured? Would it matter to you to discover that an item was manufactured in Bangladesh?
2. If you found an article of clothing that had a label stating that it was manufactured in the United States, would this make it more attractive to you? What if the item was 20% or 30% more expensive, would that keep you from buying it?
3. What is the best way to make sure the workers in factories are treated fairly? Can you come up with one detailed proposal?
Endnotes
1. Anu Muhammad, “Wealth and Deprivation: Ready-made Garments Industry in Bangladesh,” Economic and Political Weekly, 46, no. 34 (August 20, 2011), 23–27.
2. United States General Accountability Office, –“Sweatshops” in the U.S.: Opinions on Their Extent and Possible Enforcement Options, a briefing report to the Honorable Charles E. Schumer, House of Representatives, no. HRD-88-130BR, August 1988, www.gao.gov/assets/80/77185.pdf.
3. “The 1833 Factory Act,” UK Parliament, accessed October 28, 2013, http://www.parliament.uk/about/living-heritage/transformingsociety/livinglearning/19thcentury/overview/factoryact/.
4. M. L. Disher, American Factory Production of Women’s Clothing (London: Deveraux Publications Ltd, 1947).
5. Tony Michels, “Uprising of 20,000 (1909).” in Jewish Women: A Comprehensive Historical Encyclopedia, Jewish Women’s Archive, March, 20 2009, http://jwa.org/encyclopedia/article/uprising-of-20000-1909.
6. “The 1911 Triangle Factory Fire,” Cornell University, accessed May 5, 2014, http://www.ilr.cornell.edu/trianglefire/story/fire.html.
7. Savitri Goonesekere, “A Rights-Based Approach to Realizing Gender Equality,” UN Women, accessed May 5, 2014, http://www.un.org/womenwatch/daw/news/savitri.htm.
8. National Labor Relations Act, 29 U.S.C. §§ 151-169 (1935).
9. “Efforts to Address the Prevalence and Conditions of Sweatshops,” U.S. General Accounting Office, November 1994, http://www.gao.gov/archive/1995/he95029.pdf.
10. Allen R. Myerson, “In Principle, a Case for More ‘Sweatshops’” New York Times, June 22 1997, http://ww.nytimes.com/1997/06/22/weekinreview/in-principle-a-case-for-more-sweatshops.html.
11. Worker Rights Consortium, “Global Wage Trends for Apparel Workers, 2001–2011,” Center for American Progress, July 11, 2013, http://www.americanprogress.org/issues/labor/report/2013/07/11/69255/global-wage-trends-for-apparel-workers-2001-2011/. | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/01%3A_Chapters/1.09%3A_CSR_and_Sweatshops.txt |
Source: Stockmonkeys.com, (CC-BY 2.0, 2012) Figure 10.1 A common practice worldwide is for government favors to be sought in exchange for surreptitious payments in cash. Corruption is not merely a problem in developing countries. In recent years, American, German and Italian companies have been implicated in corruption scandals, both domestic and international.
The Problem of Corruption
When a large corporation decides to enter a foreign market, it must usually secure a number of licenses, permits, registrations, or other government approvals. Certain types of business may be even be impossible or illegal unless the corporation is first able to obtain a change or adjustment to the nation’s laws or regulations. Since the power to authorize the foreign corporation’s activities is vested in the hands of local politicians and officials, and since corporations have access to large financial resources, it should not be surprising that some corporate executives resort to financial incentives to influence foreign officials. While certain financial incentives, such as promises to invest in local infrastructure, may be legitimate, any form of direct payment to the foreign official that is intended to influence that official’s public decisions will cross the line into illegal subornation, also commonly referred to as bribery.
Bribery is one of the archetypal examples of a corporation engaged in unethical behavior. A number of problems can be attributed to business bribery. First, it is obviously illegal—all countries have laws that prohibit the bribery of government officials—so the foreign company engaging in bribery exposes its directors, executives, and employees to grave legal risks. Second, the rules and regulations that are circumvented by bribery often have a legitimate public purpose, so the corporation may be subverting local social interests and/or harming local competitors. Third, the giving of bribes may foment a culture of corruption in the foreign country, which can prove difficult to eradicate. Fourth, in light of laws such as the US Foreign Corrupt Practices Act (FCPA) and the Organization of Economic Cooperation and Development (OECD) Convention on Anti-Bribery (discussed in greater detail below), bribery is illegal not only in the target country, but also in the corporation’s home country. Fifth, a corporation that is formally accused or convicted of illicit behavior may suffer a serious public relations backlash.
Despite these considerable disincentives, experts report that worldwide business corruption shows little signs of abating. Transparency International (TI), a leading anticorruption organization based in Berlin, estimates that one in four people worldwide paid a bribe in 2009. It appears that the total number of bribes continues to increase annually. The World Economic Forum calculated the cost of corruption in 2011 at more than five percent of global GDP (US\$2.6 trillion) with over \$1 trillion paid in bribes each year.1
Governments and intergovernmental organizations have redoubled their efforts to combat the perceived increase in international business corruption. Globalization, which accelerated in the final decades of the twentieth century, is often cited by specialists as contributing to the spread of corruption. Corporations and businesses in every nation have become increasingly dependent on global networks of suppliers, partners, customers, and governments. The increased interaction between parties in different countries has multiplied the opportunities for parties to seek advantage from illicit incentives and payoffs. Although outright bribery is clearly unethical and illegal, there is great deal of behavior that falls into a gray zone that can be difficult to analyze according to a single global standard. When does a business gift become a bribe? What level of business entertainment is “right” or “wrong”? Over the past two decades, governments and regulators have sought to clearly define the types of behavior that are considered unethical and illegal.
Another factor that has heightened the sense of urgency among regulators is the magnitude of recent cases of corruption (several of which are described in greater detail below). The cost to shareholders as well as stakeholders and society has proven enormous. Governments and international organizations have ramped up their enforcement of anticorruption laws and sought increasingly severe penalties, sometimes imposing fines amounting to hundreds of millions of dollars. Largely as a result of these efforts, most multinational corporations have developed internal policies to ensure compliance with anticorruption legislation. However, as we will see in the case study featured in this chapter, such compliance also raises complex ethical dilemmas for corporations. It remains difficult to regulate ethical behavior when social and cultural norms vary significantly from country to country. Acts that are considered unethical in one country may represent a traditional way of doing business in another. One legal scholar explains the difference as follows:
A common misconception, held in both Western and developing countries, and even among many researchers on corruption, is to confuse what is corrupt with what is legal. Laws are defined by values, as are ethical norms, but the two are not equivalent.2
In this chapter, we will explore the impact, reasonableness, and the effectiveness of anticorruption laws and corporate compliance rules. Finally, we will discuss a case in which the line between corruption and traditional business practices remains difficult to ascertain.
The Scope of the Problem
Recent cases of corruption in international business have attracted considerable media attention. Paying a traffic officer to ignore a minor traffic violation is unremarkable; paying a senior government official a secret bribe of millions of dollars to get a large contract signed is a different matter.
While virtually all multinational companies have adopted anticorruption policies, it is not clear how often these policies are fully implemented and internalized as part of the corporate culture. The emphasis on anticorruption policies is relatively recent and, even in the most responsible organizations, such policies are still works in progress. However, there is some evidence that the implementation is not always as effective as might be hoped.
For example, a study by Control Risks and the Economist magazine’s Intelligence Unit showed that while most companies acknowledge the need to combat bribery and corruption, many are complacent and unprepared to deal with scandals inside their own organizations.3 The review of global attitudes on corruption surveyed more than 300 senior lawyers and compliance heads in April 2013. It painted a disturbing picture. The authors concluded that “too many companies still fall short of best practices in their anticorruption compliance programs.” Despite ranking anticorruption high on most corporate agendas, the report noted a “danger of complacency” among companies, and as a result, “the risk of a company finding itself in the middle of a corruption-based investigation remains real.”4
Transparency International’s Corruption Perceptions Index (CPI) ranks countries and territories according to their perceived levels of public sector corruption. It is an aggregate indicator that combines different sources of information about corruption, making it possible to compare countries. Perceptions are used because corruption is generally a hidden activity that is difficult to measure. The CPI confirms that corruption remains a problem worldwide and takes place even in the wealthiest countries.5 Research in 2012 by the Austrian economist Friedrich Schneider placed the annual loss to the German economy alone at €250 billion.6
The Dow Jones State of Anti-Corruption Survey in 2011, which surveyed more than 300 companies worldwide, found that more than 55 percent of companies have found cause to reconsider working with certain global business partners due to concerns about possible violation of anticorruption regulations. Additionally, the biannual survey indicated than more than 40 percent of companies believe they have lost business to competitors who won contracts unethically, an increase from only 10 percent in the 2009 study. “Strict liability provisions in legislation like the UK Bribery Act make businesses responsible for the activities of their agents and partners overseas, and this is having a direct impact on the occurrence of new business partnerships between firms,” said Rupert de Ruig, managing director of Risk and Compliance, Dow Jones.7
Global social costs from corruption include the reluctance of investors to commit to projects in developing economies, inhibited growth of businesses due to syphoning off of revenues for bribes, and diversion of funds from food, medical, and educational aid programs. In addition, it seems likely that corruption hampers the development of executive talent in developing nations, given that frustrated local executives may seek to emigrate to countries where corruption is less prevalent. Consider for example, the long term impact of the necessity of paying a bribe to get running water in a household in rural India.8 This type of corruption can effectively exclude the poor from access to vital public services. Economist Daniel Kaufmann of the Harvard Institute of International Development cites public sector corruption as the most severe obstacle to development in developing and post-communist countries.9
Notable Examples of Corruption
The number and magnitude of recent corruption cases prosecuted by government authorities is disconcerting. Moreover, these widely-publicized cases may represent only the tip of the iceberg: Regulatory bodies focus principally on the bribery of public officials so that other forms of business corruption are under-reported. To date, the ten largest cases successfully tried pursuant to the FCPA are listed below (in order of magnitude of fines):
1. Siemens (Germany): \$800 million in 2008
2. KBR/Halliburton (USA): \$579 million in 2009
3. BAE (UK): \$400 million in 2010
4. Total SA (France): \$398 million in 2013
5. Snamprogetti Netherlands BV/ENI SpA (Holland/Italy): \$365 million in 2010
6. Technip SA (France): \$338 million in 2010
7. JGC Corporation (Japan) \$218.8 million in 2011
8. Daimler AG (Germany): \$185 million in 2010
9. Alcatel-Lucent (France): \$137 million in 2010
10. Magyar Telekom/Deutsche Telekom (Hungary/Germany): \$95 million in 2011
There are other recent examples of large-scale corruption in international business.
Walmart in Mexico
According to a report issued by the Mexican Employers Association in 2011, companies operating in Mexico spend more than 10 percent of their revenue on corrupt acts. One of the most well-known cases was the Walmart scandal that was brought to light in September 2005 and resulted in the company’s stock value dropping by as much as \$4.5 billion. Evidence unearthed by internal and external investigations revealed a widespread use of bribes, alleged to total over \$24 million. The bribes were paid to facilitate the construction of Walmart stores throughout Mexico. The country is a huge market for Walmart—one in every five Walmart stores is in Mexico. As of October 2014, the investigation continued, having implicated Walmart management at the most senior levels of complicity or awareness.
GlaxoSmithKline in China
In September 2013, China’s Xinhua news agency reported that a police investigation into bribes paid by drug manufacturer GlaxoSmithKline (GSK) indicated that the bribes were organized and paid by GSK China and not by individuals operating on their own prerogative as had been reported by the company initially. Police also alleged that the corporate parent merely went through the motions of an internal audit process, indicating a knowledge and acceptance of the bribery. This very recent case suggests that the Chinese government’s widely publicized arrests and convictions for bribery have not yet served as a sufficient deterrent to corrupt practices by foreign corporations.
Alcatel in Costa Rica
In January 2010 Alcatel agreed to pay Costa Rica US \$10 million in reparations for social damage caused by Alcatel’s payment of US\$2.5 million in bribes to get a contract to provide mobile phone services in that country. This case is notable for its application of the concept of social damage and the resulting order of compensation to the citizens of Costa Rica.
Anticorruption Laws and Regulations
The first major international anticorruption law was the United States’ Foreign Corrupt Practices Act (FCPA), adopted in 1977.11 The FCPA criminalized bribery of foreign public officials by American business enterprises. Initially, the FCPA was not well received. Few other countries followed suit and US companies complained that the FCPA shut them out of the competition for billions of dollars’ worth of overseas business contracts. Slowly, however, the push for concerted anticorruption measures gathered momentum, and intergovernmental institutions such as the OECD, the African Union, and the United Nations eventually adopted anticorruption conventions. Further support for a global anticorruption agenda was provided by the lending institutions such as the World Bank, by NGOs such as Transparency International, and by the rapidly evolving CSR movement. Notable among these efforts was the Communist Party of China’s promulgation of a code of ethics to fight the widespread corruption within the Communist Party of China.12
The FCPA applies only to bribes paid (or offered) to foreign government officials to obtain or retain business or to develop an unfair competitive advantage. The concepts of bribe and foreign government official can be interpreted broadly. While companies and executives charged with FCPA violations have often sought to characterize their payments as business “gifts,” this has not shielded them from liability when there was evidence that the payments were intended as a means of obtaining illicit objectives. However, where payments have been characterized as “facilitation” or “lubrication” payments, meaning that they merely created an incentive for an official to promptly execute legal actions, such as mandatory customs inspections, the payments have been allowed. In numerous countries, the state owns all or part of commercial enterprises so that a great number of business executives could be classified as foreign government officials.
In 1997, the OECD established legally binding standards for defining bribery in international business transactions. Similar to the FCPA, the OECD Anti-Bribery Convention focuses on the bribery of public officials. Like the FCPA, the OECD also potentially creates the opportunity for companies to circumvent the regulations by hiring consultants or agents (this topic will be the focus of this chapter’s case study discussion). Notably excluded from the scope of the OECD Convention is a prohibition against bribing private parties. Despite such loopholes, the OECD Convention was an important step in the right direction. By 2012, forty-three countries had ratified the agreement and begun its implementation.
Corruption and Culture
Prior to the expansion of international trade in the nineteenth and twentieth centuries, most commerce was local and followed traditional norms and ethical standards. With the expansion of international trade, however, businesses began to operate across cultural and linguistic boundaries. Misunderstandings and transgressions, both intended and unintended, became commonplace. To some extent, perceptions of corruption may derive from cultural differences, because behavior that is considered corrupt in one society may represent a normal business practice in another.
One example can be found in the Chinese concept of guanxi, which refers to the reciprocal obligations and benefits expected from a network of personal connections. A person with a powerful level of guanxi is considered a preferred business partner because such a person can utilize connections to obtain business or government approvals. Guanxi can derive from extended family, school friends and alumni, work colleagues, members of common clubs or organizations, and business associates. Chinese businesspeople seek to cultivate an intricate and extensive web of lifelong guanxi relationships. The key expectation in guanxi networks is reciprocity in the granting of favors; the failure to reciprocate is considered a breach of trust. The greater the favor asked or granted, the greater the favor owed. Guanxi thus generates a cycle of favors over time. Among the questionable practices facilitated by guanxi are certain types of corrupt favoritism—such as nepotism (favoring family members) and cronyism (favoring friends). In fact, relatively high levels of nepotism or cronyism are accepted and tolerated in many non-Western cultures, not only in China. As applied to business transactions, guanxi opens doors and creates opportunities for business relationships and dealings. In itself, guanxi is not corrupt. However, strong guanxi connections and obligations can serve as an incentive to corruption.
Many traditional business practices around the world are rooted in concepts analogous to guanxi, as in the practice of using business gifts or personal connections to speed up transactions both large and small. Russians use the term blat to refer to the ability to get things done through personal networks or contacts with people of influence. The Japanese have adapted the English word connections to coin a term of their own, konne. In Pakistan, the use of personal sifarish (“recommendation”) refers to the ability to make contact with the right official on the most favorable terms. The French expression for bribe is pot de vin (“jug of wine”), which implies friendly relations. In Urdu and Hindi, petty bribes are known as chai pani (“tea water”). In West Africa the term is dash. The English colloquial term grease and the German schmiergeld (“grease money”) imply a lubrication or easing of resistance to the transaction. In Mozambique, one term for corruption is cabritismo or “goatism,” which is derived from the saying “a goat eats where it is tethered.”
The universality of such terms suggests that various forms of business bribery and graft are prevalent worldwide. However, specific business activities that are considered acceptable in some societies may be considered taboo in others. Thus, the American practice of lobbying legislators and governmental agencies would be considered an illegal form of buying influence in many other countries. In some societies, gift giving to chiefs, elders, or religious leaders is considered not only acceptable and appropriate, but even a mandatory traditional expression of respect and obligation.
A survey conducted by KPMG in the United Kingdom found that while 80 percent of respondents agreed that the UK Anti-Corruption Act was an admirable attempt to address the problem of corruption, 58 percent believed that the Act was impractical and ignored the reality that bribery is an accepted way of doing business in many countries. Other similar studies have revealed widespread international criticism of US anticorruption law as hypocritical in light of the American business practice of offering gifts to potential customers or clients (e.g., trips to conferences, golf outings, tickets to entertainment and sporting events, use of luxury facilities such as spas, condos, and country clubs, etc.).
Case Study: The Chinese Agent
The fictional case subject for this chapter is based on the difficult issue of determining the ethics of employing a well-connected agent. In our case, an American for-profit educational institution, which we will call Cleveland College, is opening a Shanghai campus to offer United States–style college programs in China. There is a ready market in China for “prestigious” US baccalaureate degrees. However, Cleveland College needs to satisfy a lot of red tape to be accredited in China and obtain the necessary licenses for an educational institution in the Shanghai area.
On an exploratory trip to Shanghai, the President of Cleveland College, Mark Rollins, is approached by a prominent businessman, Wang Li, a former member of the Shanghai city government who is familiar with the educational bureaucracy. Wang offers to assist as a public relations agent, but his fee is so hefty (\$200,000 per year) that Rollins fears that Wang is going to use much of it to grease palms. Research with local authorities indicates that Wang is well respected and has a high level of guanxi with local educational officials. Wang promises to get Cleveland College all the necessary certifications in much faster time than it usually takes, and also promises to prevent bothersome audits and bureaucratic problems. Should Cleveland College sign him on? What FCPA danger would this entail?
Corruption in China
Over the past decade, the Chinese government has joined the global community in decrying corruption and initiating regulations and laws, and publically stating a strong intent to clamp down on corruption. Thus, in a widely publicized 2011 statement by China’s Premier, Wen Jiabao, anticorruption actions were emphasized as a “primary task in 2011.”13 This was interpreted as an indication that increased enforcement of anticorruption laws will be a top government priority and that these prohibitions must be taken seriously by foreign corporations operating in China.
A number of recent high-profile cases have illustrated the extent of the Chinese crackdown on corruption. One notorious case was that of the former anticorruption official Huang Songyou, who was sentenced to death for accepting 7.71 billion yuan in bribes. In another case, Wang Huayuan and eight other senior officials of the provincial governments in Guangdong and Zhejiang provinces were convicted of corrupt actions that took place between 1998 and 2009. The former president of the Supreme Court and the former vice president of the state-owned China Development Bank were charged with taking bribes and then convicted to life in prison. In 2011, China sought the repatriation of Lai Changxing from Canada after twelve years there. As former chairman of Yuanhua International Corporation, Changxing was accused of absconding with \$7.7 billion dollars. His defense against the repatriation was that he would face torture and execution.
Some observers have questioned the resolve of the Chinese government and have suggested that the small number of corruption prosecutions concluding with extreme punishments may have less to do with ending corruption than with sending a message to those who engage in corruption beyond an acceptable level. Others have suggested that anticorruption prosecutions may be an alternative means of conducting political purges. A more positive but still skeptical interpretation is to view the anticorruption cases as an expression of support for global anticorruption, an encouragement to foreign investors who fear corruption, and a way of appeasing the Chinese citizenry. According to Yan Sun, Associate Professor of Political Science at the City University of New York, it was corruption, rather than democracy as such, that lay at the root of the social dissatisfaction that led to the Tiananmen protest movement of 1989.
Foreign Educational Institutions in China
Accompanying China’s meteoric economic development over the last three decades has been a corresponding growth in sophisticated higher education. The number of institutions of higher education in China has doubled in the last ten years. By 2020, China intends to have produced 195 million college graduates. The Chinese government has determined that it must not only increase the number of college graduates, but also make China an education destination for non-Chinese students. Accomplishing these goals will necessitate increased cooperation with Western institutions of higher education
In an interview with University World News in 2013, Michael Gaebel, head of the higher education policy unit at the European University Association (EUA) reported that, just a few years ago, “it was very difficult to convince European vice-chancellors that Asia was not just a provider of fee-paying students. Now no one in Europe can ignore that China has become important globally for research and will continue growing in importance.”14 In 2013, China’s vice minister for education announced that China would take efforts to attract more foreign students. By 2020, China hoped to attract some 500,000 international students, making the country the largest Asian destination for international students. Currently about 35,000 foreign students are studying in China.
With 37 million students studying in over 2,400 universities and colleges, China has the largest system of higher education in the world. The rapid growth of demand for colleges and universities in recent years has resulted in a number of problems, including rushed and poor quality construction, high student–lecturer ratio, shortages of qualified faculty, and questionable academic quality, not to mention allegations of corruption.
Corruption in higher education in China has been widely reported, including allegations of widespread plagiarism, selling of degrees, favoritism in admissions, and bribery for grades. A study by Wuhan University Professor Shen Yan showed that ghostwriting academic theses was a one billion–yuan business in 2009, and that 70 percent of the published theses were plagiarized. John Bray, author of “Facing up to Corruption, a Practical Guide,”15 reports that parents in China often have to pay for a spot in a university for their child.
Compounding these problems is the growing level of unemployment among recent graduates. The Epoch Times reported a 7.7 percent employment rate among the seven million graduates in 2014.16 The decline in the perceived value of Chinese higher education has created an opportunity for foreign universities. There is a perception that a degree from a Western university is more credible and that its graduates are more employable than graduates of Chinese institutions. Carl Fey, Dean of Nottingham University Business School China, discusses the growing number of foreign campuses opening in China. At his school, they spend the first year teaching students English, so they learn to work, study, and speak in English before diving into subject matter. “Your diploma looks exactly the same whether you graduated from Nottingham, UK, or Nottingham, China,” Fey said. “That’s because the education’s actually the same.”17
The number of foreign universities operating in China is changing rapidly as institutions from Europe, the United States, and other Western countries enter the fray. This course is not without operational hurtles, as was noted when Harvard University pulled out of a high profile and widely published and joint venture with its Chinese counterpart, the prestigious Beijing University. Harvard cited several reasons for ending the relationship, including low enrollment, high operating expenses, and issues within the Chinese language program.
One of the problems faced by Western universities operating in China is that the potential for government censorship places severe limitations on academic freedom. While this is the most notable issue, there are many other challenges, mostly related to cultural differences. The red tape involved in getting the appropriate licenses, accreditations, and building permits from the various governmental agencies involved in local, regional, and centralized government is a daunting task for a foreigner. Most foreign institutions find it more expedient to partner with established Chinese universities than to attempt to open a new university, but even then, there are all the usual issues related to operation of a partnership or joint venture, all complicated by the cultural differences.
Topic for Debate: To Hire, or Not to Hire a “Consultant” Who May Be Bribing Officials on Behalf of the University
Should Cleveland College hire the local Chinese agent, or “public relations” consultant, who requests a sizeable enough retainer that we may reasonably suspect he is making cash donations to obtain the goodwill of local educational institutions?
Affirmative Position
Cleveland College should hire the local Chinese agent/consultant.
Possible Arguments
• Secret cash payments may act as a morally-acceptable “lubricant” to facilitate commercial exchanges.
• Corruption is an inevitable part of the process of opening up new and developing markets.
• Companies that elect to comply with the letter of the law in the strictest sense may be at a severe competitive disadvantage.
• Payment of “fees” to officials can serve as an incentive to development, cutting through unnecessary bureaucracy.
• Corruption as defined in this context is a Western concept and may not be applicable in all countries.
• In many societies, the “gift culture” is a form of appropriate behavior based on long-standing traditions of exchanging favors.
Negative Position
Cleveland College should not hire the local Chinese agent/consultant.
Possible Arguments
• Paying an agent a fee, who then bribes a government official does not necessarily relieve the college of the risk of violating anticorruption laws.
• Paying an agent to bribe a government official sets a precedent that can lead to ongoing demands for bribes.
• If the organization pays a bribe, and they do not get what they paid for, they have no recourse. This is a high-risk form of investment.
• If the college goes down the path of bribing officials for any purpose, using the justification that it is a traditional and acceptable way of conducting business, it implicitly condones a lack of ethics to its employees—the next step would be to sell grades, diplomas or admissions.
Readings
10.1 “Corruption from a Cross-Cultural Perspective”
Hooker, John. “Corruption from a Cross-Cultural Perspective.” Pittsburgh, PA: Carnegie Mellon University. October 2008. ba.gsia.cmu.edu/jnh/corruption08s.pdf.
The world is shrinking, but its cultures remain worlds apart, as do its ethical norms. Bribery, kickbacks, cronyism, and nepotism seem to be more prevalent in some parts of the world, and one wants to know why. Is it because some peoples are less ethical than others? Or is it because they have different ethical systems and regard these behaviors as acceptable?
…The phenomenon of corruption provides a good illustration of these realities. Corruption is best understood as behavior that corrupts: it undermines the cultural system in which it occurs. Because cultures can operate in very different ways, very different kinds of behavior can corrupt. Practices that Westerners consider questionable, such as cronyism and nepotism, may be functional in other cultures. Practices that are routine and acceptable in the West, such as bringing a lawsuit for breach of contract, may be corrupting in a wide range of cultures, Western and non-Western, but for very different reasons.
The West tends to be universalist in its outlook: every society works, or should work, essentially the same way. Its business practices, for example, should be based on a market system that is characterized by transparency and regulated by laws that apply to everyone. A country that fails to conform to this model is seen as underdeveloped or dysfunctional. It follows from this view that that corruption is basically the same in Sweden as in Sudan.
The reality, however, is that different cultures use radically different systems to get things done. Whereas Western cultures are primarily rule-based, most of the world’s cultures are relationship-based. Westerners tend to trust the system, while people …cemented by personal honor, filial duty, friendship, or long-term mutual obligation. Loyalty to cronies is suspect behavior in the West but represents high moral character in much of the world.
…What is corrupt in the West may be acceptable elsewhere. The classic example of the purchasing agent illustrates this point. The Western purchasing agent is expected to award contracts based on the quality of bids and transparently available financial information about the bidders. An agent who favors personal friends is viewed as corrupt, because cronyism subverts this transparency-based system. It creates a conflict of interest: A choice that is good for the agent and his or her cronies may not be good for the company.
In much of the world, however, cronyism is a foundation for trust. A purchasing agent does business with friends because friends can be trusted. He or she may not even ask to see the company financials, since this could insult the other’s honor. It is assumed that cronies will follow through on the deal, not because they fear a lawsuit, but because they do not wish to sacrifice a valuable relationship in an economy where relationships are the key to business. In such a system it is in the company’s interest for the agent to do business with friends, and cronyism may therefore present no conflict of interest.
What is acceptable in the West may be corrupt elsewhere …Even so basic a practice as negotiation, which is routine in the West, can disrupt harmony in Confucian cultures. Westerners tend to organize their affairs around agreements, deals, or contracts, relying on a concept of covenant that traces back to the ancient Middle East. These agreements are hammered out in negotiation, as for example when labor and management sit across the table from each other. This practice is functional and constructive, so long as it proceeds according to rules of fair play and good faith.
Confucian cultures …are based primarily on loyalty and obligation to friends, family or superiors rather than on a system of rules.
10.2 “Facing up to Corruption: A Practical Business Guide”
Bray, John. “Facing up to Corruption: A Practical Business Guide.” London: Control Risks. 2007. www.giaccentre.org/documents/CONTROLRISKS.CORRUPTIONGUIDE.pdf
Direct and Indirect Bribery
Indirect bribery is one of the most sensitive policy issues facing international companies. A typical example would be a case where a company employs a commercial agent to help it win a government contract. The agent is paid by commission based on a percentage of the contract fee; part of that commission is passed on to a government official. The agent’s employers do not know—and do not wish to know—what happened…
The OECD Anti-Bribery Convention explicitly covers payments made “directly or through intermediaries” to secure a business advantage. US and other international legal practice already includes several cases where companies have been prosecuted for paying bribes via agents. Ignorance—wilful or otherwise—is not a defence.
…A broad understanding of corruption includes certain kinds of influence, although the boundary between acceptable and unacceptable forms of influence is often hard to define. A series of cases in the US and other countries have drawn attention to the ethical issues surrounding political lobbying. In principle, political lobbying is legitimate. One of the main roles of industry associations is to lobby government on their members’ behalf. Individual companies, like ordinary citizens, are entitled to seek assistance from their political and diplomatic representatives. Problems arise when such contacts appear secretive, when there is a suspicion of favouritism or when a company’s influence appears to be both disproportionate and against the wider public interest.
In many societies it is common to speed up both larger and smaller transactions through personal connections… The use of personal contacts is both commonplace and useful. However, as with political lobbying, it becomes problematic when the connections lack transparency and when officials break rules on behalf of their business friends, or seek illicit favours in return.
In cases of doubt, the so-called “newspaper test” provides a useful indicator: would a proposed transaction cause you or your company embarrassment when reported in the press? If it would, do not do it.
10.3 “The Cost of Corruption: A Discussion Paper on Corruption, Development and the Poor”
Evans, Bryan R. “The Cost of Corruption: A Discussion Paper on Corruption, Development and the Poor,” (Middlesex, UK: Tearfund, 1999), accessed December 3, 2014, www.tearfund.org/webdocs/Website/Campaigning/Policy%20and%20research/The%20cost%20of%20corruption.pdf.
Far from being a “victimless crime,” corruption infringes the fundamental human right to fair treatment. All persons are entitled to be treated equally, and when one person bribes a public official he acquires a privileged status in relation to others. He becomes an ‘insider’ while others are made “outsiders” (and the more “outside” they are—the very poor, the landless, women, ethnic minorities—the more they will be hurt). Clare Short, the UK Secretary of State for International Development, notes a report in the Indian magazine Outlook to the effect that the bribe for a new water connection was R1,000. This effectively excluded the poor from access to running water, with all the health and time-loss implications that this entails. Corruption is thus profoundly inegalitarian in its effects—it has a “Robin Hood-in-reverse” character. Hugh Bayley MP, introducing a bill to create offences of international bribery and corruption, went so far as to say that “bribery is a direct transfer of money from the poor to the rich.”
…The ramifications spread yet further. Productive foreign investment may be lost. Before the Asian crisis of 1997/98 there were some who argued that corruption was not harmful, it merely greased the wheels of commerce. It was pointed out that some countries which ranked high in surveys of the level of corruption, also excelled in economic growth. The World Development Report notes that the question of predictability (the amount to be paid, the certainty of outcome) throws some light on this apparent paradox. “For a given level of corruption, countries with more predictable corruption have higher investment rates…”
However, the Report went on to state that even in these countries corruption had an adverse impact on economic performance, because the higher transaction costs and increased uncertainty put off potential investors. Time magazine quotes research by Professor Shang-Jin Wei of Harvard School of Government to the effect that the high level of corruption in Mexico compared with Singapore was the equivalent of a 24 per cent increase in the marginal rate of taxation.
A conservationist, Lansen Olsen, in a letter to the Transparency International Newsletter notes that “political corruption is a major feature of the political habitat in which wildlife conservation efforts sink or swim.” When corruption breaches regulations designed to protect the environment, everyone suffers in the long term, as the loss of primary forest leads to soil erosion, local climate change, etc., but it is the poor who have the smallest resources with which to weather environmental degradation.
Corruption can also have ugly and unpredictable consequences for the (Western) briber. As soon as he pays he begins to lose control. If he does not get what he paid for he is in no position to complain. Having broken the law he is vulnerable to blackmail. If he tries to break the corrupt relationship he may face a variety of threats, including the threat of violence.
Synthesis Questions
1. Consider the following hypothetical example: An American college seeks to obtain a good image among Chinese educational regulators and accreditors by inviting a number of them, all expenses paid, to a week-long conference in Hawaii. Is this morally acceptable? Does it constitute a form of bribery? Why or why not?
2. In the past two decades, a number of very large corporations have paid large fines for corrupt behavior. Presumably, the executives who authorized the payments were highly-educated, experienced, professional people. Why do you think they failed to speak up against the corruption?
3. This chapter explores the concept of guanxi. Do you think guanxi is morally wrong, or rather, is an acceptable form of traditional practice that must be allowed to continue? What are the prospects for guanxi in the future?
Endnotes
1. “Clean Business is Good Business,” International Chamber of Commerce, Transparency International, the United Nations Global Compact and the World Economic Forum Partnering Against Corruption Initiative (PACI), accessed Nov. 26, 2014, http://www3.weforum.org/docs/WEF_PACI_BusinessCaseFightingCorruption_2011.pdf.
2. Sharon Eiher, “Corruption in International Business: The Challenge of Cultural and Legal Diversity,” Wichita, KS: Friends University, accessed October 29, 2013, www.ashgate.com/pdf/SamplePages/Corruption_in_International_Business_Ch1.pdf .
3. “International Business Attitudes to Corruption: Survey 2013.” Control Risks Groups Limited, accessed Nov. 26, 2014. www.controlrisks.com/en/services/integrity-risk/international-business-attitudes-to-coruption.
4. Theresa Tedesco, “Anti-Corruption High on Corporate Agenda, Low in Practise: UK Study,”nFinancial Post, July 15, 2013, http://business.financialpost.com/2013/07/15/anti-corruption-high-on-corporate-agenda-low-in-practise-u-k-study/.
5. “Corruption Perceptions Index 2013.” Transparency International, accessed Nov. 26, 2014. http://www.transparency.org/cpi2013/results.
6. “Corruption ‘will cost Germany €250 billion.’” The Local, March 16, 2012. http://www.thelocal.de/20120316/41373.
7. Dow Jones Risk and Compliance. “Dow Jones State of Anti-Corruption Compliance Survey,” Dow Jones, March 31 2011, http://www.dowjones.com/pressroom/SMPRs/DJACCSurvey2011.html.
8. Mukti Jain Campion, “Bribery in India: a Website for Whistleblowers,” BBC News, June 11, 2011, accessed on December 3, 2014, http://www.bbc.co.uk/news/world-south-asia-13616123.
9. Kaufmann, Daniel. “Corruption: The Facts.”Foreign Policy, Summer 1997. 114-131. info.worldbank.org/etools/docs/library/18143/fp_summer97.pdf.
10. Richard Cassin, “France’s Total SA Cracks Our Top 10 List,” FCPA Blog, May 29, 2013, http://www.fcpablog.com/blog/2013/5/29/frances-total-sa-cracks-our-top-10-list.html#.
11. “A Resource Guide to the U.S. Foreign Corrupt Practices Act.” U.S. Dept. of Justice, accessed Nov. 26, 2014. http://www.justice.gov/criminal/fraud/fcpa/guide.pdf.
12. Sommerville, Quentin. “China Communists Get New Anti-Corruption Ethics Code.” BBC News, Feb. 24, 2010. http://news.bbc.co.uk/2/hi/asia-pacific/8533410.stm.
13. “Chinese Premier Renews Call for Fight Against Corruption.” Xinhua News. March 25, 2011. news.xinhuanet.com/english2010/china/2011-03/25/c_13798577.htm.
14. Sharma, Yojana. “Beijing Wants More In-Depth HE Links with Europe.” University World News. May 11, 2013. http://www.universityworldnews.com/article.php?story=20130510160844829.
15. Bray, John. “Facing Up to Corruption: A Practical Business Guide.” Control Risks Group Limited. 2007. www.giaccentre.org/documents/CONTROLRISKS.CORRUPTIONGUIDE.pdf.
16. Chen, Lu. “Employment Rate for China’s College Graduates Lowest Ever.” Epoch Times. August 5, 2014. http://m.theepochtimes.com/n3/843094-employment-rate-for-chinas-college-graduates-lowest-ever/.
17. “Why Foreign Colleges Are Entering China.” CNN.com. July 2, 2013. http://schoolsofthought.blogs.cnn.com/2013/07/02/why-foreign-colleges-are-entering-china/. | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/01%3A_Chapters/1.10%3A_Corruption_in_International_Business.txt |
Source: courtesy of John Montgomery, (CC-BY 2012), http://www.commondreams.org/views/2012/10/17/freedom-beach-dump-citizens-united Figure 11.1 The Supreme Court’s decision in Citizens United v. Federal Elections Committee gave First Amendment rights to corporations in election periods, allowing business interests to spend unlimited amounts on U.S. elections. Do corporations deserve the same rights as individuals when it comes to political speech?
Corporate Influence on Politics
Corporations today exert a considerable (and occasionally overwhelming) influence on global politics. In some countries, the influence of corporations on government is so great as to give rise to the suspicion that the government is actually controlled by corporations. Even in those countries that strictly limit corporate influence on political campaigns, the corporate sector can still play an important role in the development of governmental policies through sophisticated, high-level lobbying. In this chapter we ask, how much of this corporate influence is acceptable? We will also explore the following related questions: How can corporate influence be controlled? What is the appropriate level of corporate participation in the drafting of laws and regulations? Should corporations be allowed to contribute freely to political campaigns? What is the role of foreign and multinational corporations? Should they also be allowed to influence domestic politics?
Although we will focus on corporate influence, let us note at the outset that they are not the only source of money in politics; wealthy individuals, unions, and other participants in the electoral process also contribute significant funds and resources to campaigns. In the United States, as in most other industrialized democracies, electoral campaigns have become increasingly expensive despite attempts to limit allowable expenditures.
Given the importance of the issue, it is not surprising that a storm of controversy arose over a US Supreme Court’s ruling in 2010 that government limits on corporate spending in political campaigns violated the First Amendment right to freedom of speech. In the view of an openly dismayed President Barack Obama, the Court’s decision in Citizens United v. Federal Elections Commission “reversed a century of law to open the floodgates for special interests—including foreign corporations—to spend without limit in our elections.”1
The validity of President Obama’s objection to Citizen United has been hotly contested, and it will provide us with a focal point for our discussion: Is it true that corporations have achieved excessive influence over national politics? Are corporations entitled to be treated as “persons” when it comes to freedom of speech?
A Basic Distinction: Private vs. Public Funding of Campaigns
While private election spending in the United States is increasing, the situation around the world is quite diverse. In some countries, expenditures are increasing while elsewhere they are decreasing. A basic distinction in national campaign finance regulations is that some countries allow private support for political campaigns while other countries provide public funds to candidates.
Private Finance
In the United Kingdom there are no limits on corporate or individual giving in the general election, yet total spending on the 2010 general election was down 26 percent from 2005.2 However, in the United Kingdom, the Prime Minister may call for elections at any time within a maximum period, which shortens the total time available for campaigning and explains the need for funds. National elections tend to be more expensive in the United States because they come along at predictable four-year intervals.
In Brazil, it is estimated that \$2 billion was spent by parties and candidates in the 2010 presidential election, with nearly 100 percent of total campaign donations coming from corporations.
Public Funding
In countries such as Norway, government funding accounts for up to 74 percent of political campaigns, and political ads are banned from television and radio.
In Canada, candidates are given strict spending limits based on the number of voters in their districts, in order to even the playing field in elections, and private donations (a maximum of \$1,200 to any party) are heavily subsidized by public funds paid out through tax credits. Although the price of elections has grown 50 percent in the past decade, Canadians spent just \$300 million on the 2008 general election.3
Campaign Finance in the U.S.
US Campaign Finance Law, PACs and Super PACs
“There are two things that are important in politics. The first is money, and I can’t remember what the second one is.”
—Mark Hanna, campaign manager of President McKinley’s successful bid for the Presidency in 1896.
Concern over the influence of money in politics began at an early stage in the life of the United States, with Thomas Jefferson stating in 1816 that he feared it would be necessary to “crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.”4
Despite Jefferson’s hopes, the influence of corporations on politics grew substantially in the latter half of the nineteenth century. The presidential elections of 1896 and 1904 left much of the American populace disgusted and convinced that political office in the United States was up for sale. In 1896, the victor in the presidential election, William McKinley, outspent his competitor, the populist William Jennings Bryan, by a factor of 10 to 1. In 1904, the Democratic candidate, Alton Parker, lost the election and complained bitterly afterward that he had been defeated by large insurance companies. Parker challenged the nation to face the reality that corporations were taking over the political process: “The greatest moral question which now confronts us is shall the trusts and corporations be prevented from contributing money to control or aid in controlling elections?”5
President-elect Theodore Roosevelt took the accusation seriously and joined his own voice in the call for control of corporate contributions. In a 1905 address to Congress, Roosevelt called for legislation:
All contributions by corporations to any political committee or for any political purpose should be forbidden by law; directors should not be permitted to use stockholders’ money for such purposes; and, moreover, a prohibition of this kind would be, as far as it went, an effective method of stopping the evils aimed at in corrupt practices acts. Not only should both the National and the several State Legislatures forbid any officer of a corporation from using the money of the corporation in or about any election, but they should also forbid such use of money in connection with any legislation save by the employment of counsel in public manner for distinctly legal services.6
As a result, Congress passed the 1907 Tillman Act, the first US law prohibiting corporations from contributing directly to federal elections. However, it turned out that the law was easy to circumvent. Not only was there no enforcement mechanism or agency, the Tillman Act did not prevent corporate contributions to party primaries, and in many Congressional districts these were even more determinative than the general election. Moreover, the Tillman Act did not prohibit corporate officers from giving money personally to campaigns (the executives were then often reimbursed by bonuses from the corporations). It rapidly became clear that the Tillman Act would only be the beginning of a long and tortuous effort to curtail corporate influence.
After World War II, labor unrest reached a historical high. From 1945–1946, millions of railroad, auto, meatpacking, electric, steel, and coal workers went on strike, protesting falling wages amid rising corporate profits. Corporate fears of powerful labor unions and the perception among politicians that labor unions had communist leanings convinced Congress to pass the Taft–Hartley Act (also known as the Labor Management Relations Act) in 1947, which limited workers’ rights to strike, boycott, and picket. The law also prohibited labor unions from spending money in federal elections and campaigns. As an extension of the Tillman Act of 1907, Taft–Hartley constrained labor unions to raising money for campaign contributions only through so-called political action committees (PACs).
It was not until the 1970s that PACs were firmly regulated by the federal government. With the passing of the Federal Election Campaign Act (FECA) in 1971 (and subsequent Amendments in 1974, 1976, and 1979), the modern campaign finance system was born, along with an independent body to enforce it—the Federal Election Commission (FEC). The new law defined how PACs could operate, set contribution limits, and instituted public financing for presidential elections.7
Until 2010, individuals were limited to \$2,500 contributions to PACs, and corporations were strictly banned from donating. However, as we shall see below, the Citizens United case radically altered this landscape, removing all corporate restrictions and giving rise to the so-called Super PAC—a political action committee that can accept unlimited donations from individuals, corporations, and unions, and engage in unlimited spending. The only restriction on Super PACs is that the donors cannot coordinate activities with any candidate or campaign. As we can see below from the satirical commentary by television personality Stephen Colbert on the effectiveness of such a bar on coordination, many felt that Super PACs were in reality little more than funding mechanisms under the control of politicians themselves. It seemed that the efforts to control corporate contributions, begun with the Tillman Act, had finally reached a dead end.
Source: Cliff, (CC-BY 2.0 2010) Figure 11.2 In 2011, comedian Stephen Colbert formed a Super PAC called, “Americans for a Better Tomorrow, Tomorrow.” While it was intended as a satire of existing Super PACs, it was also a way to educate viewers about the Citizens United decision. In January 2012, Colbert decided to run for “President of the United States of South Carolina.” As was legally required, he passed off control of his Super PAC to someone totally unconnected to the committee—his Comedy Central cohort Jon Stewart.
Milestones in Campaign Finance 8
• 1907: Passage of the Tillman Act, which banned corporate political contributions to national campaigns.
• 1925: The Federal Corrupt Practices Act increased disclosure requirements and spending limits on general elections.
• 1971: Passage of the Federal Election Campaign Act (FECA), the first comprehensive campaign finance law.
• 1974: Amendments made to the Federal Election Campaign Act: limits on contributions, increased disclosure, creation of the Federal Election Commission (FEC) as a regulatory agency, government funding of presidential campaigns.
• 1976: Buckley v. Valeo: The Supreme Court upheld limits on campaign contributions, but held that spending money to influence elections is protected speech under the First Amendment.
• 1978: First National Bank of Boston v. Bellotti: The Supreme Court upheld the rights of corporations to spend money in non-candidate elections (i.e., ballot initiatives and referendums).
• 1990: Austin v. Michigan Chamber of Commerce: The Supreme Court upheld the right of the state of Michigan to prohibit corporations from using money from their corporate treasuries to support or oppose candidates in elections, noting: “corporate wealth can unfairly influence elections.”9
• 2002: Passage of the Bipartisan Campaign Reform Act of 2002 (McCain–Feingold), which banned corporate funding of issue advocacy ads that mentioned candidates close to an election.
• 2010: Citizens United v. FEC: The Supreme Court held that corporate funding of independent political broadcasts in candidate elections cannot be limited under the First Amendment, overruling Austin (1990).
The 2012 Presidential Election
The 2012 US presidential race was the most expensive in history. According to the Federal Election Commission, approximately \$6 billion was spent on the election by candidates, parties, and outside groups. Of that, \$933 million came directly from companies, unions, and individuals funneling money into Super PACs specifically enabled by Citizens United. The Center for Public Integrity found that nearly two-thirds (approximately \$611 million) went to just ten political consulting firms, who spent 89 percent of the money on negative advertising spots attacking candidates.10Influence of the Wealthy: The One Percent of the One Percent
According to the Sunlight Foundation, there is a growing dependence on the One Percent of the One Percent—an elite group of the wealthiest Americans, including corporate executives, investors, lobbyists, and lawyers in metropolitan areas who give to multiple candidates, parties, and independent issue groups. Data suggests that, while these ideological donors make up less than 1 percent of the US population, they control about one-third of America’s net worth and contribute up to 25 percent of the money provided to all federal political campaigns.11
Source: Courtesy of Sunlight Foundation (2013) Figure 11.3 Statistics show that the wealthiest 0.01% of the U.S. population contributes a major share of all American political campaign funding.
Case Study: Citizens United v. Federal Elections Commission
In early 2010, the United States Supreme Court shocked much of the nation when it ruled that corporations have the same rights of political free speech as individuals under the First Amendment to the US Constitution.
Citizens United v. Federal Elections Commission was a constitutional law case challenging the Bipartisan Campaign Reform Act (BCRA) of 2002, otherwise known as the McCain–Feingold campaign finance law. The BCRA barred corporations and unions from running broadcast, cable, or television ads for or against Presidential candidates for thirty days before primary elections, and within 60 days of general elections. In addition, the law required donor disclosure and disclaimers on all materials not authorized or endorsed by the candidate.
The Supreme Court
The United States Supreme Court plays a central and occasionally polarizing role in the American democratic system. Created by the Judiciary Act of 1789, the Supreme Court is the only court specifically prescribed by the Constitution. As the “highest court in the land,” it remains the functional and symbolic defender of American civil rights and liberties.
As the United States’ final court of appeal, the Supreme Court is the ultimate interpreter of law in the United States. With the authority to strike down any federal and state law it deems unconstitutional, the Court acts as a check on the power of the executive and legislative branches of government. In theory, the Supreme Court guarantees that changing majority views don’t subjugate vulnerable minorities or undermine fundamental American values such as freedom of speech.
Because it often appears to defend these values in direct opposition to popular opinion, the Supreme Court has been criticized as an antidemocratic institution that fails to take into account progressive social evolution. Indeed, justices are often accused of ideological activism, constitutional fundamentalism, and ignorance of the changing face of the American public. It can also be argued, however, that the Supreme Court’s decisions historically have reflected growing national sentiments about constitutional issues more consistently than it has rejected them.
Virtually every political and social hot-button issue—abortion, gay marriage, affirmative action, civil rights, immigration, and so on—appears before the Supreme Court at some point. Justices are appointed for life so that, ideally, they will not be swayed by outside political influences; unlike the president or Congress, they do not have to worry about re-election campaigns or approval ratings. The Supreme Court’s decisions have often had sweeping and profound consequences to society, and they almost always inflame passions on both sides of the political spectrum.
The Plaintiff
Citizens United, a conservative nonprofit corporation, wanted to run an on-demand cable documentary called Hillary: The Movie, which harshly criticized then-Senator Hillary Clinton during the Democratic presidential primary in 2008. The documentary featured interviews with conservative pundits and politicians who claimed that Clinton would be a presidential disaster.
The Federal Elections Committee (FEC) blocked the documentary from being broadcast, designating it as “electioneering communication” under the BCRA. Citizens United brought its case to the United States District Court for the District of Columbia, citing violation of the group’s First Amendment rights, but the lower court sided with the FEC. The case was appealed and appeared before the Supreme Court in early 2009.
Origins
In 2004, Michael Moore released a documentary, Fahrenheit 9/11, shortly before the GOP primary elections. The movie was a scathing indictment of George W. Bush, his administration’s War on Terror, and the far-reaching consequences of his first term as President. Citizens United filed a complaint with the FEC, stating that ads for the film were television broadcast communications designed to influence voters, and therefore violated federal election law. The FEC dismissed the complaint, saying it was clear that Fahrenheit 9/11, along with its television trailers and website, were purely commercial pursuits. In response, Citizens United decided to start producing its own “commercial” documentaries.
Arguments
Before the Supreme Court, Citizens United argued that the BCRA (the McCain–Feingold Act) only applied to commercial advertisements, not to video-on-demand, 90-minute documentaries such as Hillary: The Movie. The group’s lawyer, Ted Olson, did not even mention the First Amendment, nor did he call for the repeal of any part of federal election law.
Taking the opposite position was the deputy solicitor general, who argued that the Clinton documentary was the equivalent of an extended campaign advertisement, recalling the Supreme Court’s decisions in Austin v. Michigan Chamber of Commerce (1990), which held that state legislatures may prohibit corporations from using treasury funds on electoral speech, and McConnell v. Federal Election Commission (2003), which validated the BCRA’s spending limitations, stating that “express advocacy and its functional equivalent may be treated alike, and that BCRA’s definition of ‘electioneering communication’ is not facially overbroad.”12
First Opinion
After the case was argued, the Court decided that the BCRA did not apply to Hillary: The Movie, and therefore Citizens United could air it unhindered. Chief Justice John Roberts drafted an opinion, but it soon became clear that many of the justices didn’t think it went far enough. The conservative majority felt that the case was a perfect opportunity to broaden the discussion to address whether or not corporate speech should be regulated at all under the Constitution.
Roberts withdrew his opinion, and the Court called for the case to be reargued in September, almost a month before the official start of the fall term and two months before the 2010 midterm election. The justices directed the parties to file supplemental briefs addressing the question of whether the Court should overrule Austin v. Michigan and parts of McConnell v. FEC, which would amount to eliminating decades of restrictions on corporate electoral spending.
Second Opinion
The Citizens United case was reargued on September 9, 2009. By a five-to-four vote, the conservative majority held that the First Amendment to the United States Constitution prohibits the government from imposing any limits on political spending by corporations, associations, and unions. Justice Anthony Kennedy wrote the majority opinion, which he summarized from the bench in this way: “Political speech is indispensable to decision making in a democracy and this is no less true because the speech comes from a corporation rather than an individual.”13
Justice Kennedy was joined by Chief Justice John Roberts and Justices Antonin Scalia, Samuel Alito, and Clarence Thomas. To the conservative judges, the ruling was a vindication of the power of free speech; because of Citizens United, the First Amendment could now be applied universally and without prejudice.
Dissent
Justice John Paul Stevens wrote a highly critical 90-page dissent, arguing that Justice Kennedy’s opinion constituted “a rejection of the common sense of the American people, who have recognized a need to prevent corporations from undermining self-government since the founding.”14 Stevens believed that the limits Congress had for years imposed on corporate spending were necessary to curb political corruption by the wealthiest Americans, who would inevitably out-spend, out-lobby, and “out-speech” the vast majority of Americans. Stevens also argued that corporations are not “people” in the real sense—they do not have consciences, feelings, beliefs, or desires—and therefore are not true members of society, or “‘We the People,’ by whom and for whom [the] Constitution was established.”
Justice Stevens was joined in his dissent by Justices Ruth Bader Ginsburg, Stephen Breyer, and Sonia Sotomayor. These liberal justices recognized that the decision would open the floodgates for spending in electoral campaigns, making it “exceedingly difficult to maintain that independent expenditures by corporations ‘do not give rise to corruption or the appearance of corruption.’”15
Corporate “Personhood”
Widespread public criticism of the Citizens United decision has not diminished with time, particularly from liberal or progressive voters and pundits. Protesters, lawmakers, and organizations such as Move to Amend have called for a constitutional amendment to overturn the ruling. Across the country, a number of public demonstrations were held where participants waved signs reading, “Corporations Are Not People.” Despite the widespread outrage, the reality is that corporations have had many of the same rights as individuals for a very long time.
Corporate personhood refers to the legal concept that allows organizations of people, as individuals acting collectively, to be both protected by the Constitution and subject to the same laws as citizens. The word corporation derives from the Latin, corpus, meaning body, and is defined as “a body of people acting jointly, …recognized by law as acting as an individual.”16
The Romans first devised corporate personhood as a way for cities and churches to legally organize for the purposes of joint land ownership, taxation, and institutional perpetuity. Creating a “legal” or “artificial” person made it unnecessary to develop separate laws enabling large groups of people to do the same things as individuals: for instance, make contracts, own property, pay taxes, borrow money, enter into law suits, and be protected from persecution.
Since at least 1819, in Trustees of Dartmouth College v. Woodward, the Supreme Court has recognized corporations as having the same rights as “natural persons” for the purpose of contracts. Since then, the Supreme Court has given corporations increasingly more rights traditionally reserved for natural people: Fourteenth Amendment rights of equal protection (Pembina Consolidated Silver Mining Co. v. Pennsylvania, 1888), Fifth Amendment protections of due process (Noble v. Union River Logging, 1893), Fourth Amendment search and seizure protection (Hale v. Henkel, 1906), double-jeopardy immunity (Fong Foo v. United States, 1962), First Amendment protection (Grosjean v. American Press Company, 1936), Seventh Amendment rights to trial by jury (Ross v. Bernhard, 1970), the right to spend money in noncandidate elections (First National Bank of Boston v. Bellotti, 1978), and the right to spend in campaigns as a form of “speech” (Buckley v Valeo, 1976).17
Amending the Constitution to Overrule Citizens United
Move to Amend, a coalition of political interest organizations, lead the campaign for a Constitutional amendment that would overturn the Supreme Court’s decision in Citizens United. MoveToAmend.org clearly states:
We, the People of the United States of America, reject the US Supreme Court’s ruling in Citizens United and other related cases, and move to amend our Constitution to firmly establish that money is not speech, and that human beings, not corporations, are persons entitled to constitutional rights.18
Consequences
Specialists in campaign finance law predict that the Supreme Court’s ruling will shape the US electoral process for years to come. The matter is far from settled, however, as there is a growing movement of nonpartisan municipal, county, and state bodies calling for a constitutional amendment to overturn the decision. Citizens United’s legacy is far from over.
Topic for Debate: Overrule Citizens United
In this debate section, you will be asked to assume the role of a college student at a SUNY campus in New York State. The Congressional representative who has been elected from your university’s district has introduced a bill in Congress that would authorize a constitutional amendment to overturn Citizens United. The university newspaper has sponsored a public debate so that the it can determine what position to take—should the newspaper endorse (or not) the proposed amendment? You have been invited to be a part of one of the two debate teams that will address the issue at a public forum. You are expected to base your arguments to some extent on the statements and publications of legal and public policy experts.
Affirmative
The university newspaper should endorse a constitutional amendment to overturn Citizens United.
Possible Arguments
• Corporations are not people, and should not have the same rights as individuals.
• The Supreme Court erred with its decision in Citizens United, due to judicial activism.
• Electoral issues should be decided by elected officials and not by the Supreme Court.
• Corporate money inherently leads to political corruption and “secret” financing.
• Wealthy Americans by and large represent the corporate interests of America and should not drown out the voices of those with less power and money.
Negative
The university newspaper should oppose a constitutional amendment to overturn Citizens United.
Possible Arguments
• American democracy relies on freedom of speech, which should therefore be enjoyed by everyone, regardless of their legal status.
• Corporate money in elections increases political competition and awareness of issues.
• Americans can decide for themselves whether or not to elect a candidate; ads don’t make a difference either way.
• Corporations advocate for their employees, customers, and communities, and regulation will only constrain this ability.
• Corporations are fundamental to American economic progress and should be allowed to influence the political process to maintain their positive contributions to society.
Readings
11.1 Supreme Court Opinion and Pleadings
The Supreme Court’s majority opinion, the various dissenting and concurring opinions, and the parties’ briefs, may be accessed on the Internet at the following links:
The official arguments and decision can be found at “Citizens United v. Federal Election Commission.” The Oyez Project at IIT Chicago-Kent College of Law. Last updated August 25, 2014. http://www.oyez.org/cases/2000-2009/2008/2008_08_205.
The official briefs and amicus briefs can be found at “Citizens United v. Federal Election Commission.” SCOTUSblog. June 17, 2010.http://www.scotusblog.com/case-files/cases/citizens-united-v-federal-election-commission/
A video can be found at “The Story of Citizens United v. FEC (2011).” YouTube video, 8:50. Posted by “storyofstuffproject” on February 25, 2011. https://www.youtube.com/watch?v=k5kHACjrdEY.
11.2 “Why Super PACs Are Good for Democracy: Super PACs Get Government out of the Business of Regulating Speech”
Smith, Bradley A. “Why Super PACs Are Good for Democracy: Super PACs Get Government out of the Business of Regulating Speech.” U.S. News and World Report. February 17, 2012. www.usnews.com/opinion/articles/2012/02/17/why-super-pacs-are-good-for-democracy.
11.3 “The New York Times’ Disingenuous Campaign against Citizens United”
Kaminer, Wendy. “The New York Times’ Disingenuous Campaign against Citizens United.” The Atlantic. February 24, 2012. http://www.theatlantic.com/politics/archive/2012/02/the-new-york-times-disingenuous-campaign-against-citizens-united/253560/.
The paper is promoting the misconception that the ruling allowed for unlimited campaign contributions from super-rich individuals. It didn’t.
Like Fox News, the New York Times has a First Amendment right to spread misinformation about important public issues, and it is exercising that right in its campaign against the Citizens United ruling. In news stories, as well as columns, it has repeatedly mischaracterized Citizens United, explicitly or implicitly blaming it for allowing unlimited “super PAC” contributions from megarich individuals. In fact, Citizens United enabled corporations and unions to use general treasury funds for independent political expenditures; it did not expand or address the longstanding, individual rights of the rich to support independent groups. And, as recent reports have made clear, individual donors, not corporations, are the primary funders of super PACs.
When I first focused on the inaccurate reference to Citizens United in a front-page story about Sheldon Adelson, I assumed it was a more or less honest if negligent mistake. (And I still don’t blame columnists for misconceptions about a complicated case that are gleaned from news stories and apparently shared by their editors.) But mistakes about Citizens United are beginning to look more like propaganda, because even after being alerted to its misstatements, the Times has continued to repeat them. First Amendment lawyer Floyd Abrams wrote to the editors pointing out mischaracterizations of Citizens United in two news stories, but instead of publishing corrections, the Times published Abrams’ letter on the editorial page, effectively framing a factual error as a difference of opinion…
As these examples suggest, …campaign-finance reforms dating back decades have produced an overcomplicated, overreaching web of laws and regulations that are easily abused, misunderstood, or intentionally obfuscated. The complexities of campaign finance law (and tax-code provisions governing independent groups) also create incentives to oversimplify the problems caused by the campaign-finance regime by naming Citizens United as the root of all evils. This helps advance what appears to be a simple solution—repeal Citizens United with a “free speech for people” constitutional amendment declaring that corporations aren’t people. Putting aside the dangers of this approach, it wouldn’t solve the problem of super PACs: The billionaires funding them may lack personal appeal but they are, after all, people, whose expenditures were not at issue in Citizens United. When the press promotes false understandings of Citizens United and the problems of campaign finance, it “paves the way” for false solutions.
It’s worth noting that the Times is not alone among proponents of reform in scapegoating Citizens United (although it seems to have taken the lead.) The New York Times, the Washington Post, and MSNBC regularly and routinely misstate the meaning and impact of the Supreme Court’s Citizens United decision on campaign finance rules,” Steve Brill recently observed, citing a post by Dan Abrams. Brill recommends confronting reporters and commentators with their frequent misstatements. Former ACLU Executive Director Ira Glasser has gamely tried engaging New York Times Public Editor Arthur Brisbane in an effort to stop misleading readers…Are you confused yet? What does the Times believe or want you to believe about Citizens United? Whatever.
11.4 “The Citizens United Catastrophe”
Dionne, E. J., Jr. “The Citizens United Catastrophe.” The Washington Post. February 5, 2012. www.washingtonpost.com/opinions/the-citizens-unitedcatastrophe/2012/02/05/gIQATOEfsQ_story.html
11.5 Experts Assess Impact of Citizens United: HLS Professor Suggests Constitutional Amendment Stating Corporations Are Not People
Greenfield, Jill. “Experts Assess Impact of Citizens United.” Harvard Gazette. February 3, 2012. http://news.harvard.edu/gazette/story/2012/02/experts-assess-impact-of-citizens-united/.
Few recent Supreme Court cases have received as much attention—and drawn as much ire—as Citizens United v. Federal Election Commission. In a 5–4 decision, the court ruled that the First Amendment prohibits government from placing limits on independent spending for political purposes by corporations and unions. To proponents of campaign finance reform, Citizens United had the detrimental effect of inundating an already-broken campaign finance system with corporate influence. At an event sponsored by the Harvard Law School (HLS) American Constitution Society on Tuesday, HLS Professor Lawrence Lessig, author of Republic Lost, and Jeff Clements, author of Corporations Are Not People, reviewed the impact that Citizens United has had on the political process.
Clements said that the court’s decision exacerbates two problems that the American political and electoral system had already been facing—the large amount of campaign spending and the growing influence of corporate power on the political process. Clements said that both problems need to be fixed in order to restore democracy but that, rather than addressing these problems, the Citizens United decision instead requires that the American people fundamentally reframe their notion of corporations.
“We need to look at what Citizens United really asks us to do, which is to accept a lot. The court asks us to pretend that corporations are not massive creations of state, federal, and foreign laws. It asks us to pretend that they’re just like people, that they have voices, and that we’re not allowed to make separate rules for them,” he said.
Although some legal observers regard the decision as simply a bad day on the court, Clements said that Citizens United actually represents the culmination of a steady creation of a corporate rights doctrine that is radical in terms of American jurisprudence. He provided a history of the idea of corporate personhood and corporate speech, which began only in the 1970s under Chief Justice William Rehnquist. Lessig added that the system that has resulted is one in which elected officials must spend 30 to 50 percent of their time fundraising, and thus make decisions based not on what is best for their constituents, but on what their super PACs and other major donors want to see.
“We have a corrupt government, yet one that is perfectly legal,” said Lessig. “We’ve allowed a government to evolve in which Congress isn’t dependent on people alone, but is instead increasingly dependent on its funders. As you bend to the green, that corrupts the government.”
As a result, he said, members of Congress develop a sixth sense as to what will raise money, which has led them to bend government away from what the people want government to do and toward what their funders want government to do. To fix the problem, we need to produce a system where the funders and the people are one and the same. The solution, Lessig said, is a multipronged approach that includes a constitutional amendment explicitly stating that corporations are not people, as well as a movement to publicly fund elections and provide Congress with the power to limit independent expenditures.
Synthesis Questions
1. Do corporations have too much influence on American politics? Support your arguments with examples of excessive influence or lack of excessive influence.
2. Why do so many people find it repugnant to treat corporations as “persons”? Is this disfavor justifiable?
Endnotes
1. “Remarks by the President in State of the Union Address,” Whitehouse.gov, January 27, 2010, accessed December 3, 2014, www.whitehouse.gov/the-press-office/remarks-president-state-union-address.
2. “Political Party Spending at Elections,” The Electoral Commission, accessed October 25, 2013, www.electoralcommission.org.uk/party-finance/party-finance-analysis/campaign-expenditure/uk-parliamentary-general-election-campaign-expenditure.
3. Anna M. Paperny, “Election Costs Have Skyrocketed in Past Decade, The Globe and Mail, August 23, 2012, http://m.theglobeandmail.com/news/politics/election-costs-have-skyrocketed-in-past-decade/article574996/?service=mobile.
4. Jefferson, Thomas. The Jeffersonian Cyclopedia. Funk and Wagnalls Company: New York and London. Jan. 1, 1900. http://archive.org/stream/thejeffersoncycl00jeffuoft/thejeffersoncycl00jeffuoft_djvu.txt
5. Nichols, John. “Feingold Fears ‘Lawless’ Court Ruling on Corporate Campaigning.” The Nation. Jan. 12, 2010. http://www.thenation.com/blog/feingold-fears-lawless-court-ruling-corporate-campaigning
6. Roosevelt, Theodore. “Fifth Annual Message.” The American Presidency Project. Dec. 5, 1905. www.presidency.ucsb.edu/ws/?pid=29546
7. “The FEC and the Federal Campaign Finance Law,” Federal Election Commission, last updated January 2013, http://www.fec.gov/pages/brochures/fecfeca.shtml.
8. Victor W. Geraci, “Campaign Finance Reform Historical Timeline,” Connecticut Network, accessed October 25, 2013, http://ct-n.com/civics/campaign_finance/Support%20Materials/CTN%20CFR%20Timeline.pdf.
9. Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990). U.S. Supreme Court. March 27, 1990. http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=494&invol=652
10. Reity O’Brien, “Court Opened Door to \$933 Million in New Election Spending,” The Center for Public Integrity, January 20, 2013, http://www.publicintegrity.org/2013/01/16/12027/court-opened-door-933-million-new-election-spending.
11. Lee Drutman, “The Political One Percent of the One Percent,” Sunlight Foundation, December 13, 2011, http://sunlightfoundation.com/blog/2011/12/13/the-political-one-percent-of-the-one-percent/.
12. Elena Kagan, “Citizens United, Appellant v. Federal Election Commission: Supplemental Brief for the Appellee,” The Supreme Court of the United States, no. 08-205, July 2009, http://www.justice.gov/osg/briefs/2009/3mer/2mer/2008-0205.mer.sup.pdf.
13. “Citizens United, Appellant v. Federal Election Commission, The Oyez Project at IIT Chicago-Kent College of Law, last updated August 25, 2014,http://www.oyez.org/cases/2000-2009/2008/2008_08_205.
14. Citizens United v. Federal Election Commission, 558 U.S. 310 (2010).
15. Mike Sacks, “Citizens United Foes John McCain, Sheldon Whitehouse Take Argument to Supreme Court,” Huffington Post, May 18, 2012, http://www.huffingtonpost.com/2012/05/18/citizens-united-john-mccain-sheldon-whitehouse-supreme-court-brief_n_1527622.html.
16. “Corporation.” Chambers Concise Dictionary. p. 267. Allied Chambers Publishers Ltd.: New Delhi. 2004.
17. “Timeline of Personhood Rights and Powers,” MovetoAmend.org, accessed October 25, 2013, movetoamend.org/sites/default/files/Timeline_36inch.pdf.
18. “Timeline of Personhood Rights and Powers.” | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/01%3A_Chapters/1.11%3A_Corporations_and_Politics_-_After_Citizens_United.txt |
Source: David Shankbone (CC-BY 2.0, 2002) Figure 12.1 PETA (People for the Ethical Treatment of Animals) has become known for its creative and sometimes controversial publicity campaigns against mistreatment of animals (in this case, chickens)
Donna Karan: “Bunny Butcher”
In 2010, the animal rights group People for the Ethical Treatment of Animals (PETA) garnered media attention by protesting the Donna Karan fashion company’s use of rabbit fur. Karan’s company (DKNY, a fashion subsidiary of Moët Hennessy) had previously been the focus of criticism from PETA. Several years earlier, PETA had tried to meet with Donna Karan to convince her to suspend the use of real fur in her company’s clothing. Many other high-end fashion companies, such as Tommy Hilfiger, Stella McCartney, Ralph Lauren, Calvin Klein, and others had joined PETA’s ranks as PETA-approved fashion retailers, endorsing fur-free practices. DKNY, however, did not consistently participate in a PETA-approved production agenda. PETA claimed that, on repeated occasions in 2008 and 2009, DKNY had promised PETA that they would remove fur from their fashion lines, but then DKNY had failed to follow through. As a result, the high-end fashion brand became the target of a PETA-driven, viral campaign that harshly criticized the company’s use of farmed fur and labeled Donna Karan herself as a “Bunny Butcher.”
DKNY used rabbit fur and skins in various items of clothing and accessories, from the fur lining in hoods and boots to the leather on bags and shoes. PETA claimed the fur and leather farmed for these purposes was obtained from factory farms operating under inhumane conditions. According to PETA, the animals on Chinese fur farms are penned in cages without fresh air, sanitation, water, or light, conditions that take a mental and physical toll on the animals. When the animals are skinned, they are often improperly anaesthetized. Accounts have surfaced of Chinese factories that simply beat the animals over the head before beginning the skinning process. Allegedly, many animals are still alive during the skinning process and are then thrown onto piles of carcasses. Another claim was that cat and dog fur are often used to supplement the rabbit fur when factories have reason to believe that the skins will not be properly inspected.
Making strategic use of social media, PETA timed its protest on DKNY’s Facebook page for an important marketing period, so-called Cyber Monday. PETA posted the message “DKNY: Bunny Butchers” among DKNY’s Facebook comments.1 The innovative use of social media for protest purposes drew substantial media coverage. Despite the protest, according to PETA, DKNY did not alter their fur usage practices. Consequently, PETA maintained an ongoing Internet-based protest by creating the website DKBunnyButcher.com. The website, which features links to supportive videos from fashion celebrities such as Project Runway’s Tim Gunn, describes in gruesome details the practices of the fur-farming industry in China. Many fur producing operations in the United States and Europe have become less competitive in global markets due to high production costs and the tightening of legislation on fur trapping and skinning. China has subsequently stepped in as the world’s top fur exporter in the world, but not without allegations of inconsistent quality and inhumane production methods.
This chapter will ask the question, what is the role of CSR in regard to animal rights? Should fashion companies only source products from humane farms, or should they even stop using animal products at all? While many consumers may feel sympathy for a tortured rabbit, the fact remains that the majority of Americans consume meat products such as beef and pork. Leather from cows remains the preferred material for shoes, belts, and handbags. Is it hypocritical to stand up for the rights of cute animals like bunnies, dogs, baby seals, and dolphins, all while preparing to eat a bacon burger? In addition to fashion, many other industries must contend with the issue of animal rights. Businesses that are dependent on medical and scientific research, such as pharmaceutical and cosmetics companies, have been forced to implement policies and reviews to determine whether the laboratory animals they use for testing purposes are treated humanely.
Clearly, the issue of animal rights is a broad one that cannot be confined to a discussion of Chinese fur factories. Many other countries, including the United States, have been accused of lax regulation of factory farming of animal products. According to Factory Farm Map, there are four factory-farmed chickens for every single American.2 US commercial livestock and poultry operations produce three times more waste a year than that produced by the entire human population.3 The environmental toll of such methods is worrisome, but so are the potential health consequences of consuming factory farmed meat. Consumer advocates have suggested that the meat produced on factory farms is often tainted with antibiotic-resistant bacteria. Infection caused by such bacteria cannot be treated by current medicines and thus may pose a looming threat to both animals and humans.4 However, before exploring the ethical dilemmas that may be faced by a specific company in choosing how to make use of animal products, let us examine the ethical framework of the animal rights movement.
The Development of Animal Ethics and Rights
The awakening of a consciousness of animal rights began as early as the seventeenth century. Diane Beers, an animal rights activist and historian, cites examples of animal rights principles held by the first Puritan immigrants to America.5 Puritan theology accorded sanctity to the realm of animals, but the people felt that the fair treatment of animals was the sole responsibility of their owners. Anyone who did not own a particular animal did not have a right to mistreat it. Further, the Puritans believed that owners of animals had no right to abuse their investment, as this was considered un-Christian and immoral. These principles of animal rights were based on a moral hierarchy that held humans to be more deserving of rights and privileges than animals. The privileges of humanity came, in the Puritan view, from a spiritual, emotional, and intellectual superiority. The Puritans’ initial attempt to curb animal abuse and/or provide animal rights is considered by Beers a great step forward, though limited by its conception of humans as special creatures in the eyes of God.
Animal rights historians often point to the mid-eighteenth century British philosopher Jeremy Bentham as the founding ethicist of the modern animal rights movement. Bentham, known for the utilitarian philosophy that would later become associated with his protégé John Stuart Mill, believed that ethical decisions should be based on what allows the most good or happiness (and least suffering) to the largest number of people. Bentham’s utilitarianism assumed that all human individuals are equal from a moral point of view. In fact, Bentham went further and posited that all living creatures were equal in terms of this principle. This egalitarian principle was influential in the struggles for abolition of slavery and universal suffrage, but also served as a cornerstone of modern conceptions of animal ethics.
In his Introduction to the Principles of Morals and Legislation, Bentham stated: “The day may come, when the rest of the animal creation may acquire those rights which never could have been withholden from them but by the hand of tyranny…. The question is not, Can they reason? nor, Can they talk? but, Can they suffer?6 Bentham’s approach led many citizens to consider for the first time the ethical imperative to limit the suffering of animals. Bentham’s thinking prompted the creation of Britain’s Society for Prevention of Animal Cruelty (SPCA, later the Royal SPCA, or RSPCA), and the adoption of the first laws curbing animal mistreatment in England throughout the 1830s–1850s.
The United States eventually followed the lead taken by England in animal rights, as it had with the earlier abolitionist movements and suffrage movements. The first major American animal rights group, the American Society for the Prevention of Cruelty to Animals (ASPCA), was created in 1866 by Henry Bergh.7 This nascent movement was further strengthened by Charles Darwin’s publication of Origin of the Species and the resultant acceptance of the theory of evolution. Darwin’s hypothesis that humans had evolved from primitive life forms gave credence to the notion that humans were not essentially superior to other members of the natural world. The impact of Darwinian theory on philosophy and theology challenged the traditionally held view of a hierarchy among species, according to which humans were superior to other animals. The Darwinian revolution paved the way for a more open-ended approach to rights (for humans and animals alike).
Throughout the nineteenth and early twentieth centuries, activist groups in the United Kingdom and United States promoted the fair treatment of domesticated animals. This activism reflected a broader social trend toward recognition of the need for fair treatment across social and biological categories, and in particular recognized the rights of laborers, women, and children. Upton Sinclair’s The Jungle (1906), a novel describing the violent and unclean practices of the Chicago meat industry, was notably influential in this regard. The Jungle drew public attention to labor abuses in the meat industry, and also to the horrors of the slaughterhouse floor.
Animal Liberation: The Contribution of Peter Singer
The contemporary animal rights movement received an important impetus from the publication in 1975 of a book entitled Animal Liberation by Australian philosopher Peter Singer. Singer extended Bentham’s utilitarian ethics to include animals, arguing that just because animals cannot think on the same level as humans does not mean they cannot suffer. He pointed out that in the case of mentally handicapped people, as with small infants, the lack of cognitive capacity does not imply that they do not deserve the same caring treatment as other humans. The fact that animals react to pain and torture with writhing or whining suggests that they experience suffering in much the same way that humans do. The suffering communicated by animals does not have to be expressed linguistically to be understood. Singer applied the term speciesism, which had been coined by Richard Ryder, to the unjustifiable discrimination against animals by humans, reminiscent of racism, sexism, and other forms of intolerance.
Singer argued that speciesism, like racism and sexism, is based on an indefensible and biased preference for one’s own kind. Speciesism is expressed in the assumption that animals can be exploited to provide benefits to humans without regard to the suffering or well-being of animals. In Singer’s view, overcoming speciesism will require the progressive elimination of cruelty in animal experimentation, the eradication of factory farming practices, and the end of consumption of meat as a consumer good. While Singer acknowledges that it is theoretically possible to raise animals humanely, he argues that such farming is extremely uncommon and that it is better simply to move to a vegetarian diet. Singer’s radical argument has been labeled the “rights/abolitionist” doctrine of animal ethics.8
Rights/abolitionists believe that humans have no moral right to slaughter, domesticate, or use animals for pleasure or consumption in any way. This implies that animals should be left in a state of nature and allowed to lead lives free of impact from human society. A different and more moderate faction of animal ethicists are the so-called welfarists, who seek to recognize and protect animal welfare within the current system of consumption. Welfarists believe that animals may ethically be used for human benefit, so long as they are treated humanely and fairly. The welfarist perspective implicitly assumes that human rights and interests are entitled to some sort of intrinsic superiority over the rights and interests of animals.
The most important American activist group that has adopted a rights/abolitionist perspective is People for the Ethical Treatment of Animals (PETA), a nonprofit founded in 1980 with the goal of preventing animals from being abused and tortured in any way, whether via factory farming, the fashion industry, labs and scientific research, or the entertainment industry.9 PETA has become known for its highly publicized and sometimes aggressive actions and campaigns. The organization has achieved recognition as the primary face of the animal rights movement today and, as such, has taken on the responsibility of publicly castigating those businesses that fail to exercise humane treatment of animals.
Factory Farming
As of 2007, approximately 56 billion animals were being slaughtered annually worldwide for human consumption.10 Most of these were harvested in factory farm settings. These numbers do not take into account the vast number of fish and other sea creatures that are caught for industrial use or consumption as food.11 United States growers annually slaughter some 9 billion chickens, 99 percent of which are raised in factory-farm conditions. For the chickens, factory-farm conditions include preventative beak clipping (to quell cannibalism in tight quarters), unsanitary and overcrowded cages, injections of antibiotics and hormones to augment and accelerate weight gain, and little or no lighting.12 Due to the high demand for chicken and eggs as consumer goods, the production of broiler chickens and laying chickens is a high-volume endeavor. Worldwide, 31 billion chickens are slaughtered annually,13 most of them under conditions similar to those found in the US farms.
As of 2011, 5.8 million pigs were bred for slaughter in the United States.14 The factory farming of pigs requires a life of solitary confinement for each mother sow, who spends most of her life in a gestation cage that prevents movement and waste removal, leading to widespread respiratory diseases. Sows are moved to a farrowing cage after the birth of their litters, where they cannot turn around or lie down while their young feed off of them. The piglets are taken from the mother sow’s farrowing cage after about 3 weeks of initial feeding, and are then moved to group pens. There, they are fed until they reach market weight (a period of roughly 6 months), at which time they are brought to slaughter. Following the production of 2 to 3 litters, the mother sow is also taken to slaughter, usually about a year after she is brought to the factory farm.15
Cattle production for beef, the most expensive of the meat-producing industries, is somewhat more humane, despite the large numbers involved (upwards of 34.2 million cows slaughtered for meat in 2010 alone).16 Cattle raised for beef are allowed to roam somewhat freely in open spaces. They are still penned in and fed hormones, and put on a rigorous diet to gain weight. US dairy-producing cows, numbering 9.3 million in 2008, with roughly 2.3 million of these being sent to slaughter,17 share a fate similar to that of pigs and chickens. They are kept in tightly penned cages, fed hormones, and milked by machine until they are no longer viable. Additionally, both modes of cattle production can cause serious environmental harm to the areas surrounding the farm. The enormous production of manure can contaminate groundwater and render surrounding areas unlivable.
Wool, fur, leather, angora, silk, feathers, and other materials are all harvested from various types of animals, and are prominent resources in the fashion industry.18 Although many people can understand the ethical issues inherent in the factory farming of meat for consumption, most consumers do not feel similar concerns for the materials used to make clothing, especially when, as in the case of wool, silk, or feathers, it does not seem necessary to slaughter the animal to obtain the material. However, such materials are also developed and sourced under factory farming conditions. As reported by PETA, wool farmers routinely practice mulesing,19 which involves shearing sheep so close to the skin that the shears cut or remove chunks of hide and flesh in the process. Cows and all other kinds of animals are utilized for their leather. A high percentage of the leather apparel items sold in the United States are manufactured from leather that was harvested abroad. China, the world’s leading leather exporter, has been criticized for poor supervision of factory farms, where animals are not properly anaesthetized before they are skinned.
Animal Consumption in Research and Cosmetics
Approximately 100 million animals a year are killed as a result of cosmetic, medical, and scientific experimentation in the United States alone.20 Though laboratory animals are generally euthanized following the completion of the experiment or trial, it is not uncommon for many to die in the testing process. These tests include skin and eye irritation tests, repeated force feeding, “lethal dose” injection tests, vivisection, bone-breaking, paralyzing, and infection with disease.21 Though ultimately these tests are meant to benefit mankind, even proponents of animal testing for scientific benefits admit that experiments are only beneficial in some cases. According to DoSomething.org, “92 percent of experimental drugs that are safe and effective in animals fail in human clinical trials because they are too dangerous or don’t work.”22 The large margin of error in the trials and experimentations suggests that many laboratory animals experience great suffering for relatively little benefit to humans.
Proposed Solutions: Vegetarianism, Ecofarming, and Cruelty-Free Production
Animal activist groups like PETA and the Humane Society of the United States have been successful in promoting laws and codes of best practices to curb the incidence of factory farming and laboratory experimentation abuse. However, it is generally accepted that the most powerful long-term solution would be market based, in which consumers who are dissatisfied with factory farming methods turn to alternative sources of food, cosmetics, and clothing. For this reason, one of PETA’s principal goals is to raise awareness of the abuses that occur in factory farming, so that consumers will be motivated to seek alternatives. Let us consider some of the leading alternatives.
Vegetarian/Vegan Diets
Given that the principal commercial product of factory farms consists of food for human consumption, it is often argued that consumers who are concerned about animal rights should adopt a vegetarian or vegan diet. A vegetarian diet is one that does not contain any meat or fish products, while a vegan diet is free of all animal products, including milk, eggs, and cheese. A 2012 Gallup Poll found that 5% of Americans identify as vegetarian and 2% as vegan.23 This appeared to indicate a broad and continuing social trend, as only 1% of Americans had identified as vegetarian in 1971 and only 3% in 2009.24 When asked why they are vegetarians, about half of survey respondents cite health reasons, and roughly the same percentage also cites animal welfare concerns. India is generally considered to be the country with the highest percentage of vegetarians, with various studies putting the percentage of Indian vegetarians at 20 to 40 percent of the population; it also appears that Indians who do eat meat do so infrequently compared to citizens of other countries. In Europe, the highest percentage of vegetarians is found in Italy, at 10 percent, while in France the percentage is only 1.5 percent. It appears that women tend to adopt vegetarianism more often than men, with studies in the United States, the United Kingdom and Israel reporting that 60 percent or more of vegetarians were female.
Vegetarian/Vegan Clothing
Given that a relatively small percentage of Americans identifies as vegetarian, and that roughly half of these cite health concerns as their primary motivation, it should not be surprising that vegetarian or vegan clothing remains a marginal, niche category. Despite this, there is some evidence that the category is growing. For example, fashion designer Stella McCartney has developed a thriving, global brand that produces clothing, shoes, and handbags without any use of leather or fur. However, she does use wool and silk products. MooShoes, a New York retailer, markets a full line of vegan clothing, including shoes, shirts, bags, wallets and belts; these products are sourced from a number of independent producers, including such recognized brand names as Brooks and Doc Martens.
Cruelty-Free Products
Cruelty-free products are those that are not tested on animals and do not include animal ingredients. Methods of cruelty-free production rely on alternative testing methods, such as computer-based simulations. Another method is to develop new products only from ingredients referenced in a large European database of 20,000 compounds that have already been tested as safe. Another method is to test products on reconstructed human skin samples made from donated skin from cosmetic surgeries. Leading cruelty-free cosmetics brands include Aveda, M.A.C., Bobbi Brown, and Urban Decay.
Humane Farming and Meat Consumption
Given that relatively few consumers are vegetarian or vegan, while many others who are sensitive to animal rights nonetheless find it difficult to give up the consumption of meat, the alternative of humane farming is significant. Humane farming refers to animal husbandry that respects codes of conduct so that animals are raised and slaughtered in a way to minimize suffering. For example, the popular Whole Foods supermarket chain has adopted the Animal Welfare Rating Standards developed by the Global Animal Partnership in order to source meat products from humane producers. According to these standards, animals must be given space to move around, have access to outdoor areas, must be permitted natural behavior such as wallowing for pigs or pecking for chickens, and must spend their entire lives on a single farm. Another humane farming group, Humane Farm Animal Care, provides a certification to farmers and producers who comply with similar standards, and who abide by the American Meat Institute Standards for slaughtering. Such standards provide, for example, that animals must be stunned in a way that eliminates pain prior to slaughtering.
Topic for Debate: Fashion and Animal Rights
This chapter’s debate is based on a difficult decision to be made by EcoFash, Inc., a rapidly growing fictional clothing company based in Brooklyn, New York.
EcoFash began in 1998 as a line of organic cotton T-shirts featuring slogans with progressive statements, and has grown to include jeans, backpacks, sweatshirts, and baseball caps. All of the materials used are organic natural fabrics or recycled polyester. The company has thirty-two employees and is billing over \$20 million annually in sales. Recently, an infusion of capital from a new investor has permitted the company to begin planning an expansion of its product line to include shoes, jackets, and handbags.
Brenda Cordaro, the founder and principal owner of the company, is a confirmed vegetarian (and supporter of animal rights organizations like PETA) and would like to consider making the new lines vegan—meaning, free of leather, fur, wool, or silk materials. However, she has encountered vigorous opposition from her chief designer, Tessa Novak, who is horrified at the thought of having to use fake leather and imitation-silk polyester, which she finds quite ugly. Tessa’s objection to a vegan approach has received strong support from the company’s financial director, who believes the company will not be able to maximize profits if it only tries to attract customers who are willing to accept synthetic products in place of leather and wool.
On the other hand, Brenda is supported by the company director of public relations and marketing, who believes that a vegan approach will allow the company to distinguish itself from other “hipster” brands.
Brenda therefore decides to request her staff to prepare the strongest arguments on both sides for a presentation to her board of directors and the new investors.
You have been asked to develop the strongest reasons for supporting one of the following two possible responses:
Affirmative
EcoFash, Inc., should adopt a vegan-only policy.
Possible Arguments
• The vegan option is in keeping with the company’s ethical founding principles.
• It would allow the company to support animal rights.
• It would allow the company to distinguish itself from competitors.
Negative
EcoFash, Inc., should not adopt a vegan-only policy
Possible Arguments
• A vegan option would restrict design creativity.
• A vegan option would lead to unattractive or expensive products.
• A vegan option would reduce the size of the potential market for the brand in the future.
Reading
12.1. Facts on Fur Farming
“Responsible Trade.” WeAreFur, in association with the International Fur Federation. Accessed October 12, 2013. http://www.wearefur.com/our-trade/ethics/.
Animal Welfare Is at the Heart of Fur Farming
Animals are farmed for many reasons: for meat, dairy, leather, wool, sheepskin, cashmere, silk, and fur. It is the responsibility of those who farm animals to ensure that the animals in their care are treated humanely. This responsibility is taken very seriously by fur farmers.
Eighty-five percent of fur sold internationally is farmed. Fur animals have been selectively bred for over 100 years and are not the same as their wild counterparts. Not only are there laws, regulations, and industry codes of practice and farm certification programmes that govern animal welfare on fur farms, but an animal’s health shows in its fur first—so it is in everyone’s interest to look after animals well…. Animal welfare is at the heart of fur farming and in every jurisdiction there are laws or regulations governing animal welfare. Farmers themselves encourage governments to implement animal welfare regulations which are based on scientific research and in the major fur farming countries farmers work with veterinary scientists to create voluntary standards and certification programmes—for example the Welfur programme in the EU….
Fur farming is an important part of local agricultural economies. Fur farms are particularly suited for remote northern climates where arable land is at a premium and a great many fur farms support families and communities in rural areas where the climate and environment make it difficult to farm many species….
Animal Welfare
…Animals have always provided us with food and clothing—from the earliest arrival of Homo sapiens we have hunted animals. The earliest settlements were made possible through farming of livestock and crops, and various animal species have been farmed over thousands of generations….
In modern times, numerous life-saving medical advances have been made possible only through being able to test procedures and drugs on animals. Many people derive a huge amount of comfort and affection from keeping pets….
A Note on Animal Rights:
Animal rights supporters believe that animals have the same legal and moral rights as human beings and that therefore humans cannot keep, use or manage animals, for any purpose, including medical research, farming/farmed animals, meat, milk and eggs (including organic), hunting and fishing, leather and fur (including snakeskin, crocodile, etc.), wool, cashmere, pashmina, angora, silk, zoos/circuses/animal shelters/pets and horse-drawn carriages/ploughs, etc….
The IFTF and its members believe that people have a democratic right to make their own decisions about what to do for a legitimate living, what to eat, and what to wear; people should not have to live in a world where a major lifestyle choice is removed altogether.
Farming Regulations
Fur farming is well regulated and operates within the highest standards of care.
In the European Union, Council Directive 98/58 sets down rules covering the welfare of all farmed animals, including fur-farmed animals. Directive 93/119 deals with the slaughter and killing of fur and other farmed animals. Additionally, the Council of Europe adopted a Recommendation, revised in 1999, designed to ensure the health and welfare of farmed fur animals….
In North America, fur farmers also follow strict Codes of Practice and conform to provincial, state, or national animal welfare and other regulations. Regular veterinary checks are carried out in accordance with industry guidelines, provincial, state, or national requirements….
Conditions on farms are thoroughly checked and advice on improvements given when required. Many farm associations also have voluntary certification programmes in place.
Hunters and Trappers
Wild fur-bearing animals have been always been hunted or trapped by man. The ability to hunt animals as well as forage for food is a defining characteristic of Homo sapiens. Using fur from hunted animals as protection from the elements is an equally ancient characteristic. Man’s earliest tools were created for hunting and skinning animals.
Today, wild fur-bearing animals are hunted or trapped for a variety of reasons including population management, pest control, and the protection of natural habitats, in addition for food and fur. The trade in wild fur is a good example of the “sustainable use” principle of conservation—fundamental to the work of the World Wide Fund for Nature (WWF), International Union for Conservation and Nature (IUCN), and the United Nations Environment Programme. The International Fur Trade Federation (IFTF) and the Fur Institute of Canada are voting members of the IUCN….
…The sale of this precious commodity provides an important source of income for communities living in remote and economically marginal areas and for indigenous peoples such as the Cree community of North America, Inuit of Canada and Greenland, or the Sami of Northern Finland and Russia. Hunting and trapping for these communities is a way of life and continuing to trade fur is part of their rich heritage.
…No endangered species are used in the wild fur trade; the fur trade was a very early supporter of the Convention on the International Trade in Endangered Species (CITES) and promotes the implementation of this vital trade agreement by governments.
…The fur trade comprises hunting communities and many small farms and family businesses, craftsmen and women, manufacturers, dressing companies, co-operatively owned or publicly floated auction houses, designers, and retailers. It is a small but global industry. Worldwide retail turnover in 2008 was just over US \$13 billion.
The fur trade provides jobs and cash income in remote, hard to farm areas such as the deserts of Namibia, the ice floes and fjords of the Arctic Circle, the great wilderness of North America as well as being ideal for the small, family run farming economies of Eastern Europe and the Baltic States….
12.2. Inside the Fur Industry: Factory Farms
“Inside the Fur Industry: Factory Farms.” PETA. Accessed October 23, 2013. http://www.peta.org/issues/Animals-Used-for-Clothing/inside-the-fur-industry-factory-farms.aspx
12.3. Handbag Line Freedom of Animals Serves Up a Cruelty-Free Alternative to Céline
Hoff, Victoria. “Handbag Line Freedom of Animals Serves Up a Cruelty-Free Alternative to Céline.” Elle. October 8, 2013. http://www.elle.com/news/fashion-accessories/freedom-of-animals-eco-friendly-handbags.
Creating fashion that is kind to the environment is no easy feat. Labels like Stella McCartney and Matt & Nat have already paved the way for vegan accessories, and Freedom of Animals follows suit, adding to the cruelty-free conversation with a line of luxury bags.
The label was founded in 2012 by stylist Morgan Bogle and her photographer boyfriend Scott MacDonough—and trust us, these well-crafted carriers could easily pass for high-quality leather. The couple’s journey to green fashion design began just a year and a half ago. “We got to the point where we felt that all our volunteering with animals—taking dogs in and working at wildlife sanctuaries—wasn’t enough,” Bogle told us. As they brainstormed ways to be more vocal about their passion, they realized fashion was a great platform—and it didn’t hurt that their day jobs gave them a leg up in understanding the industry.
Citing McCartney, Céline, and The Row as design inspiration, the duo decided to tackle accessories, since animal skin is generally the go-to material for bags and shoes. But they upped the ante even more when they agreed to also stand by a one hundred percent sustainable MO. Not only is the faux-leather composed of recycled plastic and organic cotton, the accessories are colored with vegetable-based dyes. Still, it’s clear that the couple remains as devoted to style as they do to ethics—take an exclusive look at a backpack from the label’s upcoming resort collection, below, and we think you’ll agree.
Bogle told us more about the brand’s mission, her favorite eco-chic boutiques, and what it’s like for her and MacDonough to count Anne Hathaway, Kerry Washington, and Sarah Jessica Parker as brand fans.
Have you always had a soft spot for animals?
I was raised vegetarian and have always been super conscious of being ethical in every part of my life, so the passion for cruelty-free came from a very early age.
Faux leather can look tacky or unrealistic. How do you manage to achieve such amazing texture?
We spent a long time sourcing our materials and are so grateful to have found the most luxurious fabrications around! This was an area that we could not compromise, and we have been highly critical of the texture and touch of each element. Not only are they luxurious, but they pass US durability testing to give them a long shelf life.
Synthesis Questions
1. Does reading this chapter make you less likely to buy leather and fur products, or not? Why or why not?
2. Does reading this chapter make you more likely to go vegetarian in your food consumption (if you are not already), or not? Why or why not?
3. Do you feel that consumption of meat and use of leather and fur are “natural” and therefore acceptable? Why or why not?
4. Does an “ethical” company owe any duty to animals, or are ethical duties only owed to humans?
Endnotes
1. Paul Bigus and Michael Sider, “Bunny Butcher: PETA Protests Donna Karan New York,” Ivey Publishing: London, Canada. October 7, 2011. p. 1.
2. “United States Facts,” Factory Farm Map, accessed October 24, 2013, www.factoryfarmmap.org/states/us/.
3. Ibid.
4. For more information on the contemporary perils of antibiotic-resistant bacteria in farmed meat, see Richard Knox, “How Using Antibiotics in Animal Feed Creates Superbugs,” The Salt (blog), NPR, February 12, 2012, http://www.npr.org/blogs/thesalt/2012/02/21/147190101/how-using-antibiotics-in-animal-feed-creates-superbugs.
5. Diane Beers, “A Movement Takes Shape,” pp 19-38, For the Prevention of Cruelty: The History and Legacy of Animal Rights Activism in the United States. Ohio University Press: 2006.
6. Bentham, Jeremy, An Introduction to the Principles of Morals and Legislation. p. 21. Library of Economics and Liberty. Oxford: Clarendon Press, 1907. Accessed Nov. 26 2014. http://www.econlib.org/library/Bentham/bnthPML.html
7. “About Us,” ASPCA, accessed October 11, 2013, http://www.aspca.org/about-us/about-the-aspca.
8. Based on criteria discussed in Gary L. Francione and Robert Garner, “The Abolition of Animal Exploitation,” chap 1 in Animal Rights Debate: Abolition or Regulation? , 1–6. Columbia University Press, 2010.
9. “About PETA,” PETA, accessed October 9, 2013, http://www.peta.org/about/default.aspx.
10. “Meat Production Continues to Rise,” Worldwatch Institute, accessed October 14, 2013, www.worldwatch.org/node/5443.
11. “Food,” AnimalEquality, accessed October 12, 2013, http://www.animalequality.net/food.
12. Leah Garces, “Why We Haven’t Seen Inside a Broiler Chicken Factory Farm in a Decade,” Food Safety News, January 24, 2013, www.foodsafetynews.com/2013/01/why-we-havent-seen-inside-a-broiler-chicken-factory-farm-in-a-decade/#.UlR19mTF0gE.
13. Ibid.
14. “Pork Production on Factory Farms,” Farm Sanctuary, accessed October 12, 2013, http://www.farmsanctuary.org/learn/factory-farming/pigs-used-for-pork/.
15. Ibid.
16. “Factory Farming,” Farm Sanctuary, accessed October 22, 2013, http://www.farmsanctuary.org/learn/factory-farming/.
17. Ibid.
18. Ashlee Piper, “Fall Into Cruelty Free Fashion,” Vegucated, October 10, 2012, http://www.getvegucated.com/latests-challenges/fall-into-cruelty-free-fashion/.
19. “The Wool Industry,” PETA, accessed October 1, 2013, http://www.peta.org/issues/animals-used-for-clothing/wool-industry.aspx.
20. “Animal Experiments, Overview,” PETA, accessed October 1, 2013, http://www.peta.org/issues/animals-used-for-experimentation/animal-experiments-overview.aspx.
21. “11 Facts About Animal Testing,” DoSomething.org, accessed October 2, 2013, www.dosomething.org/facts.
22. Ibid.
23. Newport, Frank. “In U.S., 5% Consider Themselves Vegetarians.” Gallup, July 26, 2012. http://www.gallup.com/poll/156215/consider-themselves-vegetarians.aspx
24. “The War on Meat: How Low-Meat and No-Meat Diets are Impacting Consumer Markets”. Euromonitor International. August 26, 2011. http://blog.euromonitor.com/2011/08/the-war-on-meat-how-low-meat-and-no-meat-diets-are-impacting-consumer-markets.html | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/01%3A_Chapters/1.12%3A_Animal_Rights_and_CSR.txt |
[These sample student papers are provided only as examples of successful student research: they are not meant to prescribe any standard paper format and the content of each paper represents purely the author’s view.]
“Our doubts are traitors, and make us lose the good we oft might win, by fearing to attempt”. —William Shakespeare
Nuclear Energy Is Our Best Alternative for Clean Affordable Energy
Though it may surprise many environmentalists, nuclear power is environmentally friendly, or “green.” Society needs clean, cost-effective energy for a number of reasons: global warming, economic development, pollution reduction, etc. There is a popular perception that this means moving toward solar, wind, and other forms of renewable energy. However, a more in-depth analysis reveals that those alternatives are not yet practical. For the foreseeable future, nuclear must remain one of the top producers of energy in the United States. In this paper, I will address several of the misconceptions that prevent people from appreciating the benefits of nuclear energy in the context of our current economy.
Nuclear Power Is Safe
One of the biggest obstacles with moving toward nuclear power is that people are afraid of it. Accidents and disasters scare people. News reports that sensationalize events, rather than explaining them, heighten anxieties.
Chernobyl
In 1986, there was a nuclear accident at the Chernobyl nuclear power plant in the Ukraine. This was the result of a flawed reactor design that was operated with inadequately trained personnel. It was a direct result of the Cold War isolation and the resulting lack of any safety culture. This caused a steam explosion and fire. There were thirty deaths over three months. No one offsite suffered from radiation exposure—all fatalities occurred with plant operators and firemen—but there was a large increase in childhood thyroid cancers, which is said to be attributed to the intake of radioactive iodine fallout. The Chernobyl accident is different from any other nuclear power plant accident because there were radiation-related fatalities. There were no signs of radiation exposure in the general public. The design of this nuclear reactor was extremely poor; the combination of the hot fuel with the cooling water led to fuel fragmentation along with rapid steam production and an increase in pressure, thereby destroying the reactor. This caused an explosion. This accident caused the largest uncontrolled radioactive release ever recorded for any civilian operation.
Three Mile Island
On March 28, 1979, the Three Mile Island nuclear power plant experienced a cooling malfunction that caused part of the core to melt in the number two reactor. This destroyed the reactor. Although some radioactive gas was released, there was not enough to cause local residents to experience any dose above background levels. There were no injuries or adverse health effects from the Three Mile Island accident. Despite no fatalities or injuries, no new nuclear power plants have been built in the United States since 1979 because of the problem at Three Mile Island. The Three Mile Island accident was the most serious in US commercial nuclear power plant history; this is because it brought on huge changes in the emergency response planning, nuclear operator training, human factors engineering, radiation protection, and many other areas of nuclear power plant operations. This accident also made the United States Nuclear Regulatory Commission to tighten and heighten its regulatory oversight. Also, it changed the standards that nuclear power plants must meet, set by the Institute for Nuclear Power Operations. Training, operations, and event reporting rules become extremely strict and essential. Overall, this accident had a massive effect on enhancing the safety of nuclear plants.
Fukushima
More recently, the Fukushima disaster in Japan on March 3, 2011, has affected peoples’ views on nuclear energy. There was an offshore earthquake. In addition to the tremors, a fifty-foot tsunami was created. The tsunami hit the Fukushima nuclear power plant (in addition to other parts of Japan), disabling the power supply and the cooling of three reactors. All three cores melted within three days. The power plant was not designed to withstand that severe a tsunami, which caused severe problems at the power plant. After two weeks, the reactors were stable. The other prominent issue with this accident was preventing the release of radioactive materials. There have been no deaths or cases of radiation sickness. There were two fatalities on the day of the tsunami, on site, and while tragic, it was due to the tsunami, not the power plant; this represents few casualties compared to other energy disasters.
Long-Term Health Effects
The other main question about nuclear power is: What about the long-term health effects from radiation? The following is part of the conclusion from a report of a survey by researchers at the US National Cancer Institute.
If conventional estimates of the cancer risks attributable to radiation are accepted, exposures from the monitored emissions from nuclear facilities in the United States, typically less than 3 millirem per year, to the maximally exposed individual, were too small to result in detectable harm. Such levels are, in fact, much smaller than the population exposures from natural background radiation, which amount to about 100 millirem per year, excluding lung doses from radon (Jablon, Hrubec, and Boice 1991).
When looking at the highest and worst possible levels of radiation people could receive in Fukushima, 22 rem, 194 excess cancers would be created out of the 22,000 people. Clearly this is not a good thing, but you also need to remember that the 22 rem was the highest dose recorded before evacuation; and the largest amount of radiation came from iodine, which has a half-life of eight days (Muller 2012).
Nuclear Waste Disposal
Nuclear fuel, when it is depleted, must be replaced with new uranium. This occurs during a refueling outage. The depleted fuel rods still produce decay heat. The decay heat is removed by storing the fuel rods in cooling pools. When the residual decay heat is low enough, the fuel rods can be removed from the cooling pools and packaged for long-term storage. This long-term storage isolates the fuel rods from people and the environment, until the fuel decays and no longer poses a radiation hazard.
Nuclear waste disposal is already included in the cost of nuclear energy.
America’s Fear of Nuclear Energy
For years, American citizens have been so afraid of nuclear power. When America first discovered the possibilities, people were thrilled, until they began to link it with the A- bomb, and only with the A-bomb. For over fifty years, people have let its destructiveness eclipse its power for good. They have associated nuclear power with deaths of innocent people and the power to wipe out entire cities. What they do not realize is that nuclear energy can power an entire city and save the lives of innocent people. We have learned from the past, made leaps and bounds in our technology, and have an improved and extraordinary understanding of how nuclear power works. Now it is time for everyone in the United States of America to understand, believe, and support that.
Most films depict nuclear energy as a dangerous and volatile energy source. One of the most popular films this year, The Dark Knight Rises was no exception. The entire story revolved around a nuclear source of energy that could power the entire city of Gotham. The only problem was that, if this power were to get in the wrong hands, it would become a giant nuclear bomb, thereby destroying the city of Gotham. Almost annually, a film comes out about a fictional nuclear apocalypse. With all of this negative publicity, why would anyone support nuclear energy? For years, pop culture has been exploiting the idea of nuclear power and brainwashing people to be terrified of something they know nothing about. One of the main films that started this crisis was The China Syndrome, which came out in March 1979, only twelve days before the nuclear accident on Three Mile Island. The film’s distortion of nuclear power coupled with the Three Mile Island accident added to the hysteria about potential nuclear accidents. We need to create a new image in this country’s mind about how advantageous nuclear power can really be for us. If the media and films portrayed nuclear power in a realistic way, people would be educated about this energy source and begin to look at nuclear power as a solution to our energy crisis. We need to stop letting fictional popular media influence our opinions on nuclear power. It is time for America to know the truth.
Energy Sources
Electricity is an integral part of our daily lives. (It is taken for granted, until a hurricane disrupts it for a lengthy period.) Normally, various power plants generate electricity, which is transmitted and distributed to users, e.g., homes, schools, businesses, and factories. This paper discusses the problem of selecting the preferred energy source for growth in electrical generation.
So with a plethora of choices, how do we know which one is the best? Which will save us the most money? Which will save the earth? These are all serious questions that need to be answered when we are looking toward the future.
Figure 1. The main sources of energy for generating electricity. Source: U.S. EIA, year 2005 data.
Hydroelectric Power
Hydro may be considered the first renewable energy source. That is why the prime hydropower sites have already been developed. Hydroelectric power, using the potential energy of rivers, now supplies 17.5 percent of the world’s electricity (99 percent in Norway, 57 percent in Canada, 55 percent in Switzerland, 40 percent in Sweden, and 7 percent in the United States). It is not a major option for the future in developed countries, because most potential major sites in these countries are either being exploited already or are unavailable for other reasons such as environmental considerations. Growth to 2030 is expected mostly in China and Latin America (“Hydroelectric Power” 2005).
Solar Power and Wind Power
Wind and solar are relatively new renewable energy sources.
Solar power usually is considered to be direct generation of electricity from sunlight. (Solar power is also used for heating, but that is not part of this discussion.)
Photovoltaic (PV) cells are the building blocks of all PV systems because they are the devices that convert sunlight to electricity. Commonly known as solar cells, individual PV cells are electricity-producing devices made of semiconductor materials. PV cells come in many sizes and shapes, from smaller than a postage stamp to several inches across. They are often connected together to form PV modules that may be up to several feet long and a few feet wide. Modules, in turn, can be combined and connected to form PV arrays of different sizes and power output. When light shines on a PV cell, it may be reflected, absorbed, or pass right through. But only the absorbed light generates electricity.
Wind energy technologies use the energy in wind for generating electricity. Most wind energy technologies can be used as stand-alone applications, connected to a utility power grid, or even combined with a photovoltaic system. For utility-scale sources of wind energy, a large number of turbines are usually built close together to form a wind farm that provides grid power (“Renewable Energy Technology Basics” 2012).
Both solar and wind energy are considered sustainable, meaning that they provide electricity without harming the environment. They are possible sources of providing electrical energy growth.
Although there are many positive aspects of solar and wind energy, there are also many disadvantages that need to be considered.
Subsidies and Cost
One disadvantage of solar power and wind power is their high cost. Even though there is no charge for sunshine or wind, neither solar nor wind energy is cost competitive. Some argue that these are new technologies that require investments, or subsidies, to foster their development. What people do not realize is that even by subsidizing these energy sources, they are still not cost competitive. The government is using taxpayer’s money to promote an energy source that is a financial failure. The United States is not the only country having to face the facts that these subsides do not make solar and wind energy cost competitive, as countries like Germany and China are learning this as well.
China dominates the solar panel market. The cost of generating solar power has dramatically decreased over the past few years, but it is still triple the price of coal- generated power in China. Even dominating the solar panel market does not compensate for an unprofitable power panel. The solar companies are losing money and going out of business. No matter how you spin it, there is no way to make alternative energy that is triple the cost a practical choice.
Germany, the country in the European Union with the most productive economy, has been switching from nuclear power to solar and wind energy; it has been far from successful. The German government, like others, has also been heavily subsidizing solar and wind energy. The subsidies do not compensate for the sunshine average in Germany being less than that in Chicago. Energy costs now represent the biggest liability for Germany as a place to do business, especially in light of the marked increase in the number of blackouts and voltage fluctuations in the grid.
Green for Whom?
Solar and wind energy are considered to be extremely beneficial to people and the environment. That may not be a universal viewpoint. The Mexican government continues to install wind farms in the narrow waist of Mexico, known as the Isthmus of Tehuantepec, where winds from the Pacific meet winds from the Gulf of Mexico. The people who live there do not always agree that the wind farms are either an economic benefit or an environmental benefit. The indigenous people are not receiving the jobs and revenues that they were promised. Farmers and fishermen view the wind farms as harming their environment. The fishermen noticed that the research for the wind farms resulted in a mass die-off of fish. The vibrations from the wind turbines are affecting the livestock and fish, and the blades are chopping up birds. What is “green” for Mexico as a whole is not necessarily “green” for local communities.
Safety
The process of manufacturing PV cells from silicon relies on silane, a dangerous pyrophoric gas. As manufacturers produce silicon solar cells, the use of silane continues. Of course, silane is hardly the only environmental hazard involved in solar cell production. Others include toxic by-products from polysilicon manufacture dumped indiscriminately in China, and recovering cadmium—a known human carcinogen that is a primary ingredient in some thin—film solar cells—from mining slimes. Still, only silane (SiH4) has been linked directly to any deaths as a result of the solar industry.
Keep in mind that some of the components of PV cells are toxic materials. When the cells are intact, the materials are encapsulated. However, if there is a fire, the toxic materials may pose a significant hazard to anyone in the area.
PV cells are installed on rooftops. This is elevated work, which has its safety concerns. A primary safety concern with wind turbines is their height as well. Installation and maintenance require elevated work. Note that many turbines are at elevations of 300 feet (100 meters). Obviously high winds and rotating machinery are not a safe combination. Figure 2 shows the fatalities associated with wind energy.
Summary of Deaths in Wind Energy
20-Jul-12
Number of deaths in construction (installation or Removal) 41
Number of deaths in O&M 18
Number of deaths of the public 8
Number of deaths in manufacturing 2
Number of deaths in training 6
Suicides 1
Total 76
Copyright 2012 by Paul Gripe. All rights reserved. This data is provided as a public service.
Figure 2
Solar energy accounts for 0.01percent of our nation’s energy. Wind energy accounts for 0.44 percent (see Figure 1). These energy sources are not likely to be significant in the near future. Solar and wind energy are not cost effective. As mentioned, they are not as environmentally friendly as considered by their proponents. There are also safety hazards that cannot be ignored. They provide a tiny fraction of needed energy, and only when the wind is blowing or the sun is shining brightly. They are possible energy sources for the long-term, but are only applicable for a few locations, at present.
Coal energy accounts for 50 percent, natural gas 19 percent, and nuclear power 19 percent, of our nation’s power (see to Figure 1). This focuses our energy source selection among coal, nuclear, and natural gas, as they are the largest sources.
Coal, Gas, and Nuclear
Generation Background
The main method of generating electricity is from heat. A source of heat is used to raise the temperature of water to turn it into steam, which transfers its energy to a turbine. The rotation of the turbine, which is physically connected to a generator, generates electricity.
Figure 3
Figure 4
Figures 3 and 4 illustrate the common features and the differences among fossil fuel, and nuclear, power. (The steam boiler and the heat exchanger both transform the heat into steam.) The main differences are the combustion chamber, exhaust gases, and pollution control necessary for fossil fuels, compared with the reactor core, containment building, and nuclear waste necessary for nuclear fuel.
The nuclear energy discussed here is released by nuclear fission, which is the splitting of the nucleus of an atom. A power-producing nuclear reactor is “critical” the fission reaction is self-sustaining. That is, the chain reaction will continue and produce heat. As the uranium fuel is consumed, control rods need to be adjusted to keep the reactor critical. (The control rods are adjusted, in the other direction, to shut down the reactor.) The equation E = mc2 describes the amount of energy released from nuclear fission. (Energy = mass multiplied by the speed of light squared)
With fossil fuel, once the combustion is turned off, there is little residual heat to deal with. With nuclear power, even when the reactor is shut down (turned off), there is residual decay heat to remove. New reactor designs incorporate improved methods of decay heat removal, which minimizes the concern.
Fossil fuel generation involves exhaust gases and pollution control. Nuclear generation has neither exhaust gases nor pollution control, but does have nuclear waste disposal.
The Cost
Figure 5
Ideally, a power plant should be operating as close to 100 percent as possible at all times. The higher the percentage, the better the power plant. If a power plant is running at a low percentage, it is not being productive. When looking at Figure 5, it is clear that nuclear fuel has the highest average capacity percentage at 89 percent. The capacity factor for coal is 61 percent, and gas steam turbines only run at an average of 13 percent.
Figure 6 illustrates the energy content of coal, natural gas, and Uranium 235 (nuclear fuel). The much higher thermal energy content of Uranium 235, compared with coal and natural gas, is apparent. This energy content translates into needing tiny quantities of Uranium 235 compared to coal and natural gas. A single uranium fuel pellet contains as much energy as 17,000 cubic feet of natural gas, 1,780 pounds of coal, or 149 gallons of oil.
Energy Sources:
Key
Fossil Fuel
Nuclear Fuel
Thermal
Generation Process
Fuel
Thermal Energy (Calorific Content) kWh/Kg
Thermal
Brown coal (lignite)
2.8
Coking (black) coal
8.3
Natural gas (North Sea)
10.8
Oil]
12.5
Diesel
12.9
Petrol (gasoline)
13.0
Liquefied petroleum gas (LPG), a mixture of propane and butane
13.8
Uranium 235
22,800,000.0
Figure 6.
Calorific Energy Content of Fuels and Chemicals: The energy content of various materials usually, but not always, refers to the calorific or thermal energy that can be extracted from the material, usually by burning it and using the heat in some way to generate electricity.
Figure 7
First, let’s compare the production cost by fuel type. As of 2011, nuclear energy is 2.19 cents per kWh, coal is 3.23 cents per kWh, and natural gas is 4.51 cents per kWh. The 2.19 cents per kWh includes the costs of operating and maintaining the plant, purchasing nuclear fuel, and paying for the management of used fuel. (Oil is 21.56 cents per kWh.) Figure 7 shows the production cost from 1995–2011. One major thing to notice is that the actual fuel cost for nuclear power is very low compared to the other fuels.
Figure 8. U.S. Electricity Total Production Costs 1995–2011, in 2011 Cents per kWh
Figure 8 shows the total production costs from Figure 7 in a graphical format. The relative costs and cost trends are apparent.
Figure 9
For years, nuclear energy has had a lower overall production cost than coal and natural gas. In most cases, the majority of spending is on the fuel itself, and the operations and maintenance costs are relatively low. In Figure 9, you can see that coal and gas power are both spending most of their money on fuel. Nuclear is the opposite. The fuel is cheap and the majority of the money goes to operations and maintenance, meaning more people have jobs.
Compared to coal, natural gas, and renewable energy sources, nuclear-generated electricity has tremendous price stability because only 31 percent of production costs are fuel costs. Fuel accounts for 80 to 90 percent of the cost of electricity produced by fossil fuel–fired generation, making electricity from fossil fuels highly susceptible to fluctuations in coal and gas prices.
Figure 10
Figure 10 is from a Finnish study from 2000, which quantified fuel price sensitivity to electricity costs. This illustrates that the trend for rising fuel costs, as it impacts the rise in electricity costs, favors nuclear fuel over gas and coal. The cost comparisons favor nuclear power for the preferred energy source for growth in electrical generation.
Economic Effects
In addition to direct cost comparisons, there are other economic impacts. The average American nuclear power plant generates \$470 million annually in sales of goods and services in the local community, as well as \$40 million in total labor income. A Nuclear Energy Institute analysis shows that every dollar spent by the average nuclear plant results in the creation of \$1.04 in the local community, \$1.18 in the state economy, and \$1.87 in the US economy. A nuclear power plant also generates approximately \$16 million in state and local tax revenue, and about \$67 million in federal tax payments annually.
Figure 11
In addition to direct cost comparisons, there are workforce income impacts. Figure 11 compares the number of jobs, average salaries, and workforce income among different energy sources.
Figure 11 shows that nuclear power plants create more than twice as many jobs, at higher salaries, than coal power plants. The comparison between a nuclear power plant and a natural gas plant is even more striking.
Safety
Safety is not always considered in an objective manner. People can consider nuclear power unsafe from a lack of knowledge, rather than from actual comparisons. For example, approximately 30,000 people die in traffic accidents, each year, but people do not consider automobile travel unsafe. Each year, there are no fatalities from generating electricity from nuclear power, but many consider nuclear power unsafe.
Figure 12
Figure 12 shows the industrial safety trend for the US nuclear industry. Note, this shows accident rates, not fatalities.
Figure 13
Figure 13 shows the fatalities associated with the oil and gas extraction industry.
Figure 14
Figure 14 shows the fatalities associated with coal mining and the oil and gas extraction industry.
These charts clearly show that there are many dangers when working in the coal and natural gas industries.
There have been two nuclear disasters in the last three decades. There are preposterous amounts of coalmine explosions, oil spills, and pipeline explosions every year. Just to name a few, there was the Sabina’s Mexico coalmine explosion on May 3, 2011. Fourteen miners were killed and one was injured. Just five years before that, sixty-five miners were killed in a mine explosion in Mexico. On October 29, 2011, twenty-nine miners were killed from a gas explosion at the Xialiuchong Coal Mine in China. On March 20, 2011, forty-three miners were killed by three methane gas explosions in Pakistan. On September 12, 2011, at least seventy-five people were killed when a fuel pipeline exploded in Nairobi. These are just a few examples of disasters last year in the coal, oil, and natural gas energy industries. When looking at the numbers of fatal injuries in these industries, it is almost unfathomable.
The Environment
Figure 15
Another important aspect in the fuel comparison is the impact on the environment. Some forms of energy generation are less harmful than others. Figure 15 shows the emissions of sulfur dioxide, nitrogen oxides, and carbon dioxide avoided by the nuclear industry from 1995–2008. Other emissions from coal power plants include fly ash, mercury, arsenic, and particulates. These emissions are considered the cause of acid rain. Nuclear power avoids those emissions.
Coal mining is quite extensive compared with uranium mining. This is due to the relatively low energy content of coal compared with uranium, which translates to needing much higher volumes of coal. The deforestation of the environment for mining coal is a significant environmental impact.
The Solution
Nuclear energy is our energy source selection among coal, nuclear, and natural gas. It is significantly cheaper, it protects our people and it saves the earth.
Why are many people skeptical about nuclear power? Some do not realize the cost comparisons. Most consumers desire lower utility bills. That desire would encourage them to favor nuclear power. Many people do not know the actual record of accidents and fatalities among coal, natural gas, and nuclear power. The environmental issue is also clouded by subjective considerations. Few environmentalists promote nuclear power as a benign source of generating electricity. They (rightly) complain about atmospheric emissions from other power sources, but then somehow neglect to mention nuclear power as a possible solution.
We know better. We deserve better. If we are the stewards of this earth, it is our responsibility to do better. Nuclear power needs to have the light of truth shine on it if we are to move forward. It is time to bring this truth and allow intelligent judgments and comparisons to be made. If not for ourselves, than for our children’s future.
President Obama on Nuclear Energy
Over the past four years, President Obama has been a very outspoken advocate for nuclear energy. Beginning in 2008 with his inaugural speech, President Obama has been making massive strides for the nuclear energy industry in the United States. After formally accepting his re-election, people need to know where he stands on energy, as it is one of our countries biggest issues. “President Obama has a real strategy to take control of our energy future and finally reduce our dependence on foreign oil—an-all-of-the- above approach to developing all of our energy resources. President Obama and his Administration are supporting the construction of the first new nuclear power plant in decades, which will provide clean electricity for nearly 1.4 million Americans.
Over the past three years, the Obama Administration has invested in grants at more than 70 universities for research and development of nuclear technologies to improve reactor design and safety (“All of the Above” 2012).
After the Fukushima accident, President Obama continued to support nuclear energy. During an interview with KOAT in Albuquerque, New Mexico, when asked about the Fukushima accident, President Obama stated, “We’ve got to budget for it. I’ve already instructed our nuclear regulatory agency to make sure that we take lessons learned from what’s happening in Japan and that we are constantly upgrading how we approach our nuclear safety in this country.”
The Obama-appointed Nuclear Regulatory Commission (NRC) has approved four new nuclear reactors this year. President Obama has increased the amount of federal money for nuclear power plant construction by \$36 billion, which brings the total funds to \$54.5 billion. President Obama has proposed implementing a Clean Energy Standard, which defines clean energy as including nuclear power (Rennicks 2012).
If you are a supporter of President Obama and saving the earth, it would only make sense that you would support nuclear power. America needs to show that they support the man they re-elected as the President of the United States of America; they need to show that they trust in his decisions and that they’ve got his back.
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“Chernobyl Accident 1986.” World Nuclear Association. Accessed November 6, 2012. Last updated April 2014. http://www.world-nuclear.org/info/chernobyl/inf07.html.
“Energy and You.” United States Environmental Protection Agency. Last updated on February 19, 2014, http://www.epa.gov/cleanenergy/energy-and-you/index.html.
Gipe, Paul. “A Summary of Fatal Accidents in Wind Energy.” Wind Works. 20 2012. Accessed November 1, 2012. http://www.wind-works.org/articles/ASummaryofFatalAccidentsinWindEnergy.html.
“Hydroelectric Power.” Electropaedia. http://www.mpoweruk.com/hydro_power.htm.
Jablon, Seymour, Zdenek Hrubec, and John D. Boice. “Cancer in populations living near nuclear facilities: a survey of mortality nationwide and incidence in two states.” IAEA Bulletin 33, no. 2 (1991): 20-27.
Jackson, David. “Obama: U.S. Needs to Learn Lessons from Japan’s Nuclear Problem.” USA Today. 16 2011. Accessed December 7, 2012. http://content.usatoday.com/communities/theoval/post/2011/03/obama-us-needs-to-learn-lessons-from-japansnuclear-problems/1
Johnston, John. “Death Rate From Nuclear Power Vs. Coal?” The 9 Billion. Last updated 2011. Accessed October 10, 2012. http://www.the9billion.com/2011/03/24/death-rate-from-nuclear-power-vs-coal/.
Mine Safety and Health Administration. “Total Number of Injuries and Total Incidence Rates (IR) at Coal Mines in the United States, by Primary Activities, 1978-2007.” United States Department of Labor. www.msha.gov/STATS/PART50/WQ/1978/wq78cl08.asp.
Muller, Richard. “The Panic Over Fukushima.” Wall Street Journal. August 18, 2012, C1. http://online.wsj.com/article/SB10000872396390444772404577589270444059332.html.
Nuclear Energy Institute. “Nuclear Energy’s Economic Benefits—Current and Future.” White Paper. Washington D.C.: Nuclear Energy Institute, 2012.
Nuclear Energy Institute. “The Cost of New Generating Capacity in Perspective.” White Paper. Washington D.C.: Nuclear Energy Institute, 2012.
Rennicks, Jennifer. “Where Pres. Obama Stands on Energy.” Footprints: On the Path to Clean Energy (blog). CleanEnergy.org. September 7, 2012. Accessed December 7, 2012. http://blog.cleanenergy.org/2012/09/07/where-pres-obama-stands-on-energy/.
“Renewable Energy Technology Basics.” United States Department of Energy. energy.gov/eere/energybasics/renewable-energy-technology-basics.
U.S. Energy Information Administration. www.eia.gov/.
“The Economics of Nuclear Power.” World Nuclear Association. Accessed November 6, 2012. http://www.world-nuclear.org/info/inf02.html. | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/02%3A_Appendix/2.01%3A_Appendix_A_-_Nuclear_Energy_Is_Our_Best_Alternative_for_Cl.txt |
[These sample student papers are provided only as examples of successful student research: they are not meant to prescribe any standard paper format and the content of each paper represents purely the author’s view.]
Animal Rights in Context On the rare occasion that individuals choose to think about animal rights, they often do so in terms of the food industry. What should come to mind are the cruelty, corruption, and lack of credibility of slaughter houses, factory farms, and small-time butchers alike. But all too often the public turns a blind eye to the wrongdoing of meat and poultry producers. In the mind of a society where animals equal food, it is hunger and greed—not logical, rational thought or compassion—that drives motives, jades opinions, and encourages ignorance, all of which contribute to the idea that animals are food (or foe), but certainly not our friend. Not our friend, but what about our frock?1 In today’s society, where appearance is first and foremost, it should not be any wonder that such little concern is given to animal rights in terms of the fashion industry. Fur, leather, wool, and silk are used in excess, and all pose an immediate threat to the animals, who—in essence—are unwillingly forced to supply textile manufacturers, mass-producers, designers, and the like with their bodies and secretions. The abuse inflicted on and the deprivation felt by these innocent animals is horrific, especially when (much like the food industry) there are many ethical, socially responsible alternatives. Yet, despite these endless options that are now presented to those in the fashion industry, many continue in their excessive, animal-clad ways. Regulations could easily correct such issues of animal rights in fashion; however, very few, if any, have yet to be enforced. Those that have been enacted are often misleading, and yield very little power against industry practices that have been in place for centuries. This paper will discuss such practices, the mediocre measures taken to subdue them, and ultimately the reality of animal rights in fashion. Animal Rights as an Issue of Corporate Social Responsibility In terms of corporate social responsibility, the issue of animal rights, namely in fashion, is often overlooked. Seemingly more important issues, such as labor rights in the workplace, regularly take precedent, as such are noted to be of a more pressing matter. However, despite this common misconception, issues of animal rights are just as much a part of corporate social responsibility as anything else. Consider the common phrase “actions speak louder than words.” Often, the phrase is used in a positive manner to give recognition to those acting upon their ideas. Yet when it comes to those abusing animals for the sake of fashion, this phrase holds true in the most pejorative sense. Proponents of fur, leather, wool, and silk often speak little of their role in evading issues of animal rights. Hardly any note where the skins and subsequent textiles came from; even less note by which means that textile was derived. Consider that each year, “millions of animals are killed for the clothing industry,” and that regardless of if “the clothes come from Chinese fur farms, Indian slaughterhouses, or the Australian outback, an immeasurable amount of suffering goes into every fur-trimmed jacket, leather belt, and wool sweater”.2 Facts like these are universally unknown, despite being universally influenced, and thus the ignorance of the consumer is not to blame, but rather those working tirelessly to conceal their actions. Ultimately, animal rights in fashion becomes an issue of corporate social responsibility because of a notable disconnect, epitomized by the notion that what those encouraging the use of animals for fashion purposes tell us about their doing so hardly compares to what actually occurs in this vicious cycle on a daily basis. By improving upon corporate social responsibility as it pertains to animal rights, the truths, the tales, and the transitions of such a pertinent issue will certainly become clear, as will the need for radical reform. The Facts (and Fictions) about Fur Farming Fur Farming Defined
By definition, fur farming is “the practice of breeding or raising certain types of animals for their fur.”3 These animals, who have never known a life in the wild, are bred on-site, where they “spend their entire lives confined to cramped, filthy wire cages.”4 At present, there are no regulations for fur farms, and thus owners hold ultimate power over the confined animals, and are certainly unfazed by the apparent discomfort and deteriorating health of those animals. Animals raised on fur farms—namely mink, fox, and rabbit—are caged in open sheds that provide little protection from the elements.5 As a result, the animals often fall victim to pests and disease, brought on by an inability to continuously adapt to seasonal climate change. Because fur farms are often so overcrowded with animals, pests and disease spread quickly, and contagious cases such as viral enteritis and pneumonia are regular occurrences, in addition to the fleas, ticks, and lice seeking refuge on the pelts.6 Often, the pests and diseases go untreated. Animals are then left to die, infested both internally and externally.
Yet the “natural” death of animals on fur farms is hardly something owners pity. Those killed by disease, or the stress induced by that disease, eliminate one task to be performed by said fur farmer—and thus money can be saved. But for those who survive, a similar fate awaits. Animals spared for their fur are often subject to a death that is both cruel and unusual. Because furriers, much like many other manufacturers, seek to reduce cost and increase profit, they invoke the cheapest (which is often the cruelest) killing methods known to man. Suffocation, anal and vaginal electrocution, gassing, and poisoning are just a few of the legally practiced methods. Despite their apparent harshness, these specific methods remain legal. In many cases, it has been argued that the above-mentioned methods kill the pelt bearing animals quickly, instantaneously even, and thus reduce potential suffering. However, a recent PETA investigation of a Chinese fur farm found that many animals were still alive and struggling after electrocution or gassing; some were noted to have hearts beating for five to ten minutes after they had been skinned. Skinned alive in many instances, these animals are left to die amidst the unbearable pain of their pelts having been removed entirely.7 Unfortunately for these innocent animals, furriers are unmoved by the cruelty attached to their work. But why is this so? How could that be so? For furriers, only one thing matters: the condition of the pelt upon removal. A fur farmer’s method of choice, though predominately a factor of cost, thus is also impacted by the potential damage that method may inflict not on the animal, but on the animal’s pelt. Skinning animals alive is often practiced to encourage the pelt’s overall contour and fur retention.
After all is said and done, it is quite clear that the inner workings of fur farms are anything but ethical—and certainly not socially responsible. However, individuals continue to encourage the manufacturing, production, and eventual use of fur for garments of both high and low fashion, which leaves the question: Is ignorance really bliss, or is the truth about fur farming something so many individuals miss?
Fur Farming Exposure and Concealment
Through the work of organizations like PETA, the cruelties of fur farming are gaining recognition in the public eye. Yet while organizations work to expose the realities about animal rights in fashion, many counter organizations seek to conceal them. Such an organization has arisen under the Fur is Green campaign. The Fur is Green campaign claims that “fur is a natural, renewable and sustainable resource,” meaning that because furriers “only use part of what nature produces each year without depleting wildlife populations or [damaging] the natural habitats that sustain them,” ecological balance is maintained.8 But these recent claims that fur is environmentally friendly are quite unfounded, and it is clear that the fur industry is not fooling anyone. According to Joshua Katcher, renowned ethical fashion expert, “factory farming is factory farming. When you place a concentrated number of wild animals in an area that hasn’t evolved to deal with that concentration of waste—environmental disaster is inevitable.”9 Other such organizations claim that, while fur farming may be misguided, fur used from wild caught animals—known as free-range fur—is more ethical because the animals have lived their lives free and natural in the wild.10 However, upon capture, these animals suffer a fate similar to that of their fur farmed counterparts.
Thus, while countless organizations seek to prove not only the viability, but also the ethical nature of fur use in fashion—going so far as to claim fur as being “green”—not one has succeeded at doing so. What these counterorganizations have succeeded at doing, however, it highlighting the disconnect between the actions of furriers and the words of those furriers.
The Lessons (and Lies) About Leather Manufacturing
Leather and Animals
Much like fur, which can be taken from countless animals, leather can be made from cows, pigs, goats, sheep, alligators, ostriches, kangaroos, and—in some instances, where animal rights are particularly neglected—even dogs and cats.11 These animals are slaughtered, but only after they have lived in a life of horror on a gruesome factory farm.
Much like factory farms that house cows and the like for food production, factory farms for fashion purposes are extremely crowded. The animals who reside in these farms are deprived of necessities and often fall victim to abuses so cruel it becomes hard to believe that any human being could be capable of such acts. Castration, branding, tail-docking, and dehorning are done regularly, without painkillers. Many of these animals, upon slaughter, have their throats slit so quickly that the killer does not succeed at rendering the animal unconscious. As a result, many of the animals killed for their leather are skinned and dismembered while still conscious.12 Tens of millions of cows are killed in this manner each year, despite regulations trying to lessen the cruelty of slaughter, although “the federal Humane Slaughter Act stipulates that cows should be stunned by a mechanical blow to the head and rendered unconscious before they are strung up.”13 However, as has been the case throughout, because time is of the essence, the high speed of the assembly lines often results in improper stunning.14 Improper stunning, as with improper throat slitting, is an entirely unethical practice that leaves millions of cows in terror and to suffer unbearably as they are skinned.
In terms of fashion, while much of the leather used is derived as a byproduct of cows used for beef and milk, waste management and issues of sustainability should not surpass the welfare of the animals at stake. As PETA notes, “buying leather directly contributes to factory farms and slaughterhouses because skin is the most economically important byproduct of the meat industry.”15
Leather, Animals, and the Environment
Economical it may be, but environmental is it not. Despite the fact that using leather as a byproduct of factory farming reduces waste, the slaughter of animals and the subsequent manufacturing of their leather is hellish, specifically in terms of the fashion industry’s effect on the environment.
As in any case of mass production, natural resources are required at unfathomable amounts. Raising animals for food and leather “requires huge amounts of feed, pastureland, water, and fossil fuels,” all of which could be used for practices more ethical and environmentally sound, namely feed, which could be used to solve hunger in many third-world countries.16 In addition to these natural resources, leather manufacturing specifically requires unbelievable amounts of energy and chemicals. These chemicals often end up in US waterways, in addition to the animals’ excrement, and thus possess a toxic threat to both human beings and other living animals.17 The Environmental Protection Agency has gone as far to consider the chemicals used in leather manufacturing hazardous, and yet still practices persist. Many countries known for their leather industries are out of governmental reach, and because issues of animal rights are, to a great extent, less important abroad, the abuse continues.
Although animal rights organizations have also worked to expose the cruelties of leather manufacturing, the skin is still used for fashion purposes. Producers, manufacturers, designers, and retailers alike turn their backs on the animals that should be seen as their compatriots. Rather, these animals are seen as merely a means to an end—an end that only benefits those “who profit from the misery and suffering of others” with seemingly less valuable lives than themselves.18
The Questions (and Misconceptions) About Wool and Silk
Wool
To the standard shopper or fashion enthusiast, wool appears to be a perfectly ethical natural fiber, one free from the issue of animal rights. Often, this is assumed because the sheep providing the fiber are not slaughtered for their skin, as are those providing leather hides and fur pelts. However, while these animals may not face the same gruesome end as their friends of fashion, it is not acceptable to assume that those wool-bearing beings live wonderfully ethical lives.
Much like leather and fur, wool is an incredibly sought-after textile. Because of this, there is an incredibly strong market for the fleece and skin of sheep. As a result, these animals “are treated as nothing more than wool-producing machines,”19 and shearers are not shamed for generating those machines. Shearers, although they do not kill their victims as do furriers or leather manufactures, are not shy from being equally as evil. Profit is, of course, their top priority, one that far surpasses the concern for their wool-bearing animals’ welfare. Shearing sheds are one of the worst places in the world for cruelty to animals, despite the common misconception that shearing is in fact healthful for these animals. Because shearers are often paid by volume, and not by hour, fast work is encouraged; regard for the well-being of these sheep being sheared is not even so much discouraged as it is ignored entirely.20 Sheep that survive the shearing process—many die from cuts and wounds caused by fast work—are left with no remaining fleece. These animals often become ill without enough wool to protect them from temperature extremes because they have no insulation against both cold and heat.21
But cruelty during the process of wool production goes beyond easily avoidable shearing accidents and weather-induced illness. The cruelest, and one of the most common, practices of sheep shearing is known as mulesing, a process by which “huge chunks of skin and flesh are cut from the animals’ backside, often without any painkillers.”22. This practice is done most often to sheep raised as merinos, who are bred specifically to have wrinkly skin, an attribute that encourages more wool per animal.23 Breeding merinos in this way creates what would actually be considered an unnatural overload of wool, were there any standards to protect sheep from shearing. This excess of wool “causes many sheep to collapse and even die of heat exhaustion during hot months, and the wrinkles collect urine and moisture. Attracted to the moisture, flies lay eggs in the folds of skin, and the hatched maggots can eat the sheep alive.”24 Fearful that these pests may lessen the wool’s quality upon shearing and spinning, mulesing was developed as a way to free not the sheep, but the wool, of maggots. Mulesing “is a crude attempt to create smoother skin that won’t collect moisture;” however, “the exposed, bloody wounds often become infected,”25 often by the maggots this practice was supposed to ward off. Many sheep who have undergone this particular mutilation suffer; many more die. Mutilation in the form of mulesing is thus not only cruel, but ineffective, and many other practices could easily discourage pest infestations in a humane manner. Through diet regulation, spray washing, or simply breeding types of sheep without excess wool, sheep can be spared.26 Noting this, many companies have taken progressive steps to reduce their wool consumption, pledging to move away from mulesed wool.
Thus, as is clear, “no amount of fluff can hide the fact that anyone who buys wool supports a cruel and bloody industry.”27 While wool has long been seen as natural fiber of ethical standards, this misconception is illustrative of the fashion industry’s ability to encourage a disconnect between the actions of shearers and the words of those shearers.
Silk
In terms of animal rights, silk is perhaps of the least concern to the average consumer. However, as the issue of animal rights in fashion covers the entire realm of animal fibers, it is important to address those problems associated with silk harvesting.
Conventional silk is made by boiling the intact cocoons of silk worms. In mass-production, silk is often made from domesticated silkworms, raised on farms much like the animals used for fur, leather, and wool.28 The silkworms—in caterpillar stage—are fed mulberry leaves until they are ready to spin cocoons. Silk is secreted as a liquid from two glands in the caterpillar’s head, and it is the silk that forms the worm’s cocoon.29 When the silkworm has passed through this stage of development, the cocoon is placed in boiling water, thereby beginning a process which eases the extraction of silk thread, and thereby killing the silkworm.30
As if being boiled to death is not cruel enough, silk worms often lead lives that are unconventional. They are exploited for their secretions, and thus kept in a strictly controlled environment to ensure that their silk is of the highest quality. For those fortunate enough to break free of their cocoon before boiling, a similarly unfortunate life awaits. Because silk caterpillars are bred to maximize silk production, the moths that emerge from their cocoons do so with countless defects. Many cannot fly because their bodies are too big compared to their wings; many cannot eat because their mouths are underdeveloped. Proponents of silk use claim that worms bred for harvesting live perfectly suitable lives, as insects cannot feel pain. However, experts disagree over to what extent an insect can feel pain, and highlight that because an insect’s nervous system is different from a mammal’s, it is difficult to gauge an insect’s feelings (namely because worms cannot show their distress in ways that humans easily recognize).31 Nonetheless, the mere presence of a nervous system should be enough to solidify claims of silk worm suffering, as signals from stimuli still elicit a response to those stimuli.32 Thus, despite public belief, silk caterpillars suffer immeasurably as they are either unethically boiled alive or born as moths with seemingly intentional defects.
Yet the suffering of a silk caterpillar is not the only immeasurable aspect of silk production. What also appears to me immeasurable is just how extensive the use of silk moths is. “The amount of useable silk from each cocoon is small,” and as a result, it takes hundreds of silkworms “to produce just one silk scarf or tie.”33 Consider that approximately fifteen silkworms are killed to make one gram of silk thread. Consider, then, that it takes approximately 10,000 silk worms to make one sari, a fashion item commonly made from the finest of silk threads. If allowed to develop naturally, outside of a farm, and free of genetic breeding, silk worms would turn into defect-free moths, and silk could still be harvested. By collecting the cocoons those moths chewed out of, manufacturers would be able to unravel the silk strands and produce silk textiles in similar quantities. However, the strands of tussah silk (the official name for unfarmed silk) are much shorter, less lustrous, and thus less valuable. And as has been the pattern throughout the animal rights in fashion debate, quality of said animal fiber is of more importance than the animal’s quality of life.
Ethical Fashion: The Development of Animal-Friendly Design
Over the years, issues of animal rights in fashion have become increasingly more prevalent. Long gone are the days of vegan hippies, who shunned fashion for being a cruel institution. Here to stay are the fashion-conscious vegans, in the age of ethical fashion.
Ethical fashion “is an umbrella term to describe ethical fashion design, production, retail, and purchasing. It covers a range of issues such as working conditions, exploitation, fair trade, sustainable production, the environment, and animal welfare.”34. In essence, it encompasses all aspects of corporate social responsibility as it pertains to the fashion industry. Of the CSR issues pertaining to ethical fashion, animal rights—as has been the clear case—has been given the least amount of focus. Because the topic is so controversial, it seems to be given less attention in terms of social acceptance, but it gets plenty of attention in terms of innovation and development.
Ethical fashion has illustrated that there is no need to be cruel in order to stay warm and look cool. Cruelty-free fabrics and faux furs are available in stores everywhere, and PETA continues to work with designers and clothing retailers to encourage the strict use and sale of animal-friendly fabrics.
Fur
Alternatives to fur include a wide range of faux options. Vests, jackets, hats, shawls, and muffs are now being designed with the welfare of animals in mind. These cruelty-free options are highly fashionable, and in many instances are entirely realistic. And with public figures (namely celebrities and pop-culture icons) denouncing the use of real fur, choosing to “go naked” is becoming more and more enticing.
Leather
Alternatives to leather are becoming increasingly more innovative, including vegan microfiber, which claims to match leather in strength and durability, as well as alternative, sustainable, and renewable plant-based and man-made, non-animal materials such as ultrasuede, organic cotton, canvas, nylon, velvet, linen, cork, and eco-lining. Of course, these alternatives will never match the exact look, feel, and wear of leather; however, in terms of performance, they match all qualities of leather in the most ethical of fashions.
Wool
Alternatives to wool include acrylic, cotton, cotton flannel, polyester fleece, and synthetic shearling. Newer innovations, such as Tencel, are breathable, durable, and biodegradable, and serve as is one of the newest cruelty-free wool substitutes.35 Another newer innovation, Polartec Wind Pro, is made primarily from recycled plastic soda bottles and boasts a wind resistance four times that of wool.36
Silk
Alternatives to silk include some of the most interesting developments. The use of banana leaves and tree stalks to create a silky fiber has revolutionized the production of many silk-dependent items, such as the sari.37
Vintage and Second Hand
Buying clothing, shoes, and other accessories from vintage boutiques or second-hand stores serves as an easy and affordable way to shop ethically. Although these items may be made with animal derivatives, the practice is sustainable as it encourages recycling and discourages waste. Buying vintage or second hand also limits the amount of support unethical producers, manufacturers, and designers are given, and doing so ultimately takes a stance for animal rights from a less militant view.
Thus, as PETA has noted on many occasions, “fashion should be fun, not fatal,” and choosing to buy fashion-forward products made of near-identical alternatives can encourage the adoption of this slogan-turned-lifestyle motto.38
Developing Corporate Social Responsibility Standards for Animal Rights
What Has Been Done
It is quite clear that the realities of animal rights in fashion are shielded by the glamour of the industry. Fur, leather, wool, and silk are not seen for what they truthfully are—the skins of living, breathing beings—but rather for what they can be—status-conveying, luxury fibers and textiles. In terms of corporate social responsibility, little attention has been given to such issues, encapsulated by the general issue of animal rights. While many acknowledge that the protection of animal welfare is important, many too consider the rights of human beings to be of first priority. Activist groups, such as PETA and the Humane Society of the United States, have worked for the protection of animal rights for years, and in doing so have generated a greater concern for the cause. However, in terms of legalized practice, there are few laws and acts that have impacted the fashion industry enough to inspire radical change.
What Should Be Done
The decision to develop socially responsible standards in terms of animal rights is ultimately a choice to be made by each individual corporation. While it may be unrealistic to imagine a fashion industry entirely free of fur, leather, wool, and silk, it is realistic to encourage the development of an industry with higher standards for the ethical treatment of the animals that provide for it. But aside from developing higher standards, it is also necessary to develop a means of ensuring that these standards are upheld. In many instances, companies claiming to be cruelty-free have deceived consumers through mislabeling; many have gone a step further, reverting to their fur, leather, wool, or silk use despite vowing to do otherwise.
This past February, Urban Outfitters fell victim to such a case. Since 2009, Urban Outfitters has claimed to be fur-free. After coming under attack that same year, the retailer agreed to cease the stocking of fur merchandise, and has since made notable cruelty-free fashion lists such as “Fur-Free Retailers, Designers, and Brands,” as compiled by the Humane Society.39 However, when a shopper grew suspicious of his purchase—“I have been analyzing fur and fashion for many years, and there is a significant visual difference between faux and real fur, and there is no way that the fur in this photo is faux. The way the fur falls open to reveal the skin beneath is obvious in the photos. The organic distribution of coloring is not machine-made. The hairs are not uniform. The oil-sheen of the hair is organic, not synthetic”—he ran a series of tests that confirmed his questioning.40 Upon receiving countless letters of complaint, Urban Outfitters removed the item from their inventory and released a public apology, noting that “unfortunately, the information we’d initially gathered led us to believe that the collar trim was indeed faux fur. After further investigation, we were able to confirm your assertion that the trim in question was in fact real fur.”41 Regulating animal rights specifically in terms of fashion could help to reduce the number of instances such as the Urban Outfitters case. And recently, it is these cases that have inspired new ideas about reform.
What Is Being Done
Most recently, the US Senate voted unanimously, “approving an important bipartisan bill to protect consumers and animals.”42 The law, known as the Truth in Fur Labeling Act, passed the House of Representatives in July 2010 and was signed by President Obama later that same year. The act “will bring much-needed accuracy and disclosure to fur products,” as long as those committed to animal rights in terms of corporate social responsibility ensure that it is upheld.43 Yet even with new laws coming into effect, standards already in place need to be improved. Guidelines for the protection of animal rights are limited, and governmental motions like the Animal Welfare Act only require that minimum standards of care and treatment be provided.44 But consider how the public would feel about these minimum standards if they applied to laborers in the workforce. Despite public opinion, there is little difference between the well-being of a human being and the well-being of an animal; after all, both have emotions, feel pain, and can be manipulated by another. Thus, in terms of corporate social responsibility, it is time to level the playing field, for to solve the issue of animal rights it is necessary to accept the philosophical view that considers animals to have rights similar to or the same as human beings.45
In Conclusion
Although the fashion industry has come to equate animals with foes (even frocks) and not friends, the two do not necessarily need to remain mutually exclusive. In a different sense, animals can be both friend and faux—and with this, animal rights and the fashion industry can coexist in an ethical, compassionate, exclusive, and luxurious way.
Endnotes
1. Originally, a frock was a loose, long garment with wide, full sleeves, such as the habit of a monk or priest, commonly belted. Today, the term is a common phrase for a dress or gown (often worn by a girl or woman).
2. “Animals Used for Clothing,” PETA, accessed November 16, 2011, http://www.peta.org/issues/animals-used-for-clothing/default.aspx.
3. “Fur Farming,” Wikipedia, accessed November 14, 2011, http://en.Wikipedia.org/wiki/Fur_farming
4. “The Fur Industry,” PETA, accessed November 14, 2011, http://www.peta.org/issues/animals-used-for-clothing/fur.aspx.
5. “Fur Farms,” Friends of Animals, accessed November 14, 2011, www.friendsofanimals.org/programs/fur/fur-farms.html.
6. Ibid.
7. “A Shocking Look Inside Chinese Fur Farms,” PETA, accessed November 14, 2011, http://features.peta.org/ChineseFurFarms/.
8. “Fur Is Eco-logical,” Fur Is Green, accessed November 14, 2011, www.furisgreen.com/renewable.aspx
9. “Blog: Pinnacle: Reinvent the Icon,” Reinvent the Icon, accessed November 14, 2011, www.reinventtheicon.com/blog/.
10. “Fur Farming” (see endnote 3).
11. “The Leather Industry,” PETA, accessed November 16, 2011, http://www.peta.org/issues/animals-used-for-clothing/leather-industry.aspx.
12. Ibid.
13. Ibid.
14. Ibid.
15. Ibid.
16. Ibid.
17. Ibid.
18. Ibid.
19. “The Wool Industry,” PETA, accessed November 16, 2011, http://www.peta.org/issues/animals-used-for-clothing/wool-industry.aspx.
20. Ibid.
21. Ibid.
22. “Mulesing by the Wool Industry,” PETA, accessed November 16, 2011, http://www.peta.org/issues/animals-used-for-clothing/mulesing.aspx.
23. Ibid.
24. Ibid.
25. Ibid.
26. Ibid.
27. “The Wool Industry” (see endnote 19).
28. Doris Lin, “Why Vegans Don’t Wear Silk,” About.com, accessed November 16, 2011, http://animalrights.about.com/od/animalsusedinclothing/a/Why-Vegans-Do-Not-Wear-Silk.htm.
29. Ibid.
30. Ibid.
31. “Silk, Cashmere, Shearling, and Other Animal Products Used for Clothing,” PETA, accessed November 16, 2011, http://www.peta.org/issues/animals-used-for-clothing/other-animals-used-for-their-skins.aspx.
32. Lin, “Why Vegans Don’t Wear Silk”
33. Ibid.
34. “What Is Ethical Fashion?” Victoria and Albert Museum, accessed November 14, 2011, http://www.vam.ac.uk/content/articles/w/what-is-ethical-fashion/.
35. “Alternatives to Wool,” PETA, accessed November 16, 2011, http://www.peta.org/living/fashion/alternatives-wool.aspx.
36. Ibid.
37. “Glossary,” Eco Fashion World, accessed November 26, 2011, www.ecofashionworld.com/Glossary/.
38. “The Leather Industry” (see endnote 11).
39. Annie Hartnett, “Urban Outfitters Falsely Advertises Real Fur as Fake,” Change.org News, accessed November 16, 2011, https://www.change.org/p/demand-urban-outfitters-apologize-for-selling-real-fur/u/147970
40. Ibid.
41. Della Watson, “Urban Outfitters Apologizes for Selling Real Fur Labeled Faux,” the Green Life, Sierra magazine, accessed November 16, 2011, http://blogs.sierraclub.org/greenlife/2011/02/urban-outfitters-apologizes-for-selling-fur.html
42. Amy Skylark Elizabeth, “Obama Signs Truth in Fur Labeling Act,” PETA, December 29, 2010, accessed November 16, 2011, http://www.peta.org/b/thepetafiles/archive/2010/12/29/obama-signs-truth-in-fur-labeling-act.aspx.
43. Ibid.
44. “Animal Welfare Act,” United States Department of Agriculture, accessed November 16, 2011, awic.nal.usda.gov/government-and-professional-resources/federal-laws/animal-welfare-act.
45. “Animal Welfare vs. Animal Rights,” Animal Welfare Council, accessed November 16, 2011, animalwelfarecouncil.com/welfare-vs-rights/. | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/02%3A_Appendix/2.02%3A_Appendix_B_-_Friend_Foe_or_Frock-_Animal_Rights_in_Fashion.txt |
[These sample student papers are provided only as examples of successful student research: they are not meant to prescribe any standard paper format and the content of each paper represents purely the author’s view.]
Introduction There have been numerous public controversies regarding the impact of genetic engineering on the safety of genetically modified (GM) food and the ethics. Monsanto, a leading producer of genetically engineered seeds, has been at the center of the criticisms on agribusiness and GM crops. This paper focuses on one of these controversies: Monsanto’s GMO practices and its effect on farmers. In particular, the high suicide rate among GM crop farmers in India due to its production has attracted a great deal of attention in the press. Is there in fact a negative effect of Monsanto on farmers? When genetic engineering is mentioned, many people have immediate negative reactions. However, we must address the point of view that holds that genetic engineering actually improves the nutrition, facilitates efficient production and helps the Third World countries to develop. Today, genetic engineering is advantageous in various fields such as medicine, manufacturing, and agriculture. While it is surrounded by controversy, many scientific studies have found various results and the evidence of beneficial effect of Monsanto on farmers worldwide. The first time media reported on the issue of farmer suicides in India was in 1995.1 Several years later, anti-GM activists started making claims about the harmful effect of GM seeds on farmers. Vandana Shiva, an Indian physicist turned environmental activist, blamed transgenic seeds for the suicides more than 200,000 Indian farmers over the past decade.2 However, it was in 2002, seven years after the Indian farmer suicide report, that Monsanto began selling GM cotton seeds in India.3 In addition, the dispute between Monsanto and farmers in the United States has sometimes raised lawsuits, with 145 court cases filed since 1997. The issue is that Monsanto imposes a patent agreement on farmers, requiring them to purchase new seed varieties for every season, but some farmers do not honor this agreement.4 However, Monsanto has to be paid for its inventions and its continuous research and development. The research is done for its customers, who are farmers. Genetic Engineering Technically, genetic engineering modifies the genetic structure of cells and moves genes across species boundaries to produce new organisms. These techniques involve the highly sophisticated manipulation of genetic material and other biologically important chemicals. Because genes determine an organism’s traits, moving genes from one organism to another transfers those traits. Genetic engineering can create new combinations of genes, in other words, new combinations of traits. This technology is impossible in nature and, therefore, such an artificial technology is fundamentally different from traditional plant and animal breeding. While natural reproductive mechanisms limit the number of new combinations, genetic engineering does not have restrictions, and it is possible to produce purple cows if purple genes are available in nature, such as from a sea urchin or an iris. Therefore, genetic engineering enables scientists to create gene combinations that would never be found in nature.5 Another point to note is that the controversy over the link between the possible risk of cancer and GM food remains to be addressed, and researchers at France’s University of Caen uncovered that rats fed on Monsanto’s NK603 maize and/or exposed to its gylphosate were more likely to grow tumors and multiple bodily deformities. However, the European Food Safety Authority (EFSA) found that the researchers’ study has “insufficient scientific quality to be considered as valid for risk assessment.”6 Despite many critics and researchers attempting to reveal the harm of genetic engineering, including the blame on Monsanto’s harm to farmers, not all studies are accountable. Such reports embed people with fears and negative thoughts on genetic engineering, but the truth may be different. Agriculture and GM Crops Genetically engineered crops first came on the market in 1996 as modified to tolerate the herbicide glyphosate (HT crops) or to produce their own insecticide (Bt crops).7 In the agriculture industry, genetically modified seeds are widely used for crops such as cotton, maize, soybeans, and rice. According to the International Service for the Acquisition of Agri-biotech Applications (ISAAA), there are more than 14 million farmers in 25 countries cultivating GM crops.8 And the production is significantly increasing as two billion acres of transgenic crops were planted in the same year. Monsanto introduced a new biotech crop, gyphosate-resistant sugar beets, and variety of GM crops continues to be adopted in China and India. Even in Europe, which is strongly against GMOs, 7 of 27 countries cultivated the only transgenic crop approved there. Also, the area planted with transgenic crops rose by 10 percent during the year, and the estimated value is about \$750 million.9 Small farmers can substantially benefit since the gain from GM seeds is usually much more than the cost of the seeds. Also, Bt (Bacillus thuringiensis) cotton has become a major GM seed in India because it disrupts the life cycle of the bollworm and thereby highly increases the productivity.10 Today, India is one of the largest manufacturers of the apparel and textile industry, and Bt cotton has largely contributed on the country’s significant economic development in the last decade. Theoretically, it would require less pesticide than conventional crops to use such GM seeds. But a recent study found that, although GE crops worked this way in the first few years, farmers eventually increased the use of pesticide due to the emergence of new weeds.11Small farmers can substantially benefit since the gain from GM seeds is usually much more than the cost of the seeds. Also, Bt Cotton has become a major GM seed in India because disrupting bollworm insects highly increases the productivity. (The Pros and Cons of Genetically Modified Seeds) Furthermore, research done by the Swiss National Research Programme investigated the environmental, economic, and social impacts of GM crops. According to Federal Ministry of Education and Research, the aim of this program was to investigate the potential of genetically engineering plants for Swiss agriculture; only a few people buy GM products and only a few farmers grow today. In this European country with a large anti-GM group, the industry’s economic benefits are very small and the coexistence costs too high. However, the researchers expect an increase of acceptance of GM crops when new GM crops with such herbicide and disease resistance traits become commercially available. Notably, the report asserts, “risk assessments should be based on the specific characteristics of the plant variety, rather than on the breeding method used to produce it. The environmental, social and economic impacts of a GM plant can only be determined through a direct comparison with conventionally bred plants.”12 Genetically modified foods are a very effective solution to one of the most concerning issues—world hunger—and they enable farmers in Third World countries to grow more crops more quickly and for less cost. In addition, there is a correlation with global warming since climate change is a threat to food supply and limits growing crops.13 But subtle positive effects are that the use of pesticides can keep the plants healthy and prevent damage to the environment, and less fertilizer can be used, and thereby keeping farming cost low. (Nature Biotechnology) Figure 1
Monsanto
Monsanto is a leading company of genetically engineered seeds. This public company’s headquarters are in St. Louis, Missouri, and it was founded in 1901, more than 100 years ago. The company holds 404 operating facilities in 66 countries, and there are 20,767 employees worldwide. In 2011, its net income was \$1.6 trillion and its net sales were \$11.8 trillion, which are a 13 percent and 47 percent increase from 2010, respectively. Their mission is to produce more, conserve more, and improve lives, and they are committed to sustainable agriculture. The company states that it is their purpose to work alongside farmers to grow as much food as they have in the past by selling seeds with traits developed through biotechnology, and crop protection chemicals. It was ranked in the top 10 of the World’s Most Innovative Companies by Forbes magazine, as well as honored with various other awards.
The company addresses its corporate social responsibility activities by fighting hunger, supporting human rights and education, and so on. In terms of commitment to sustainable agriculture, it states, “Looking forward, we are exploring opportunities to support continuous improvement in crop yields through our efforts in breeding, agronomics, and biotechnology. We are also exploring better health and nutrition through our vegetable business.”14 The report also notes that, as the population continues to increase, so does the demand for valuable resources; therefore, Monsanto works on providing better seeds, protecting natural resources, fighting hunger, improving nutrition, and providing economic benefits to everyone involved. 15 Based on the data compiled by ISAAA and PG Economics, Monsanto is one of the contributors to having 2.1 million resource-poor farmers adopting biotech crops for the first time in the 2008–2010 seasons, and these farmers achieved US\$3 billion in additional net income thanks to this technology adoption. In addition, there were three to seven times the level of economic benefits across rural communities. 16
GM Seeds and Farmer Suicide in India
Many Indian farmers commit suicide by drinking fatal amount of pesticides. After the media report of tragic phenomenon of Indian farmers’ suicides in 1995, the story began when anti-GM activists like Vandana Shiva blamed GM crop for this phenomenon. The media has put the blame mostly on corporate agriculture and Monsanto, and outrageous GM seed prices made small farmers suffer from debts.17 Shiva says, “On paper, genetic engineering is made to look very good, but on the ground it’s a tragedy. . . . Otherwise, we wouldn’t have farmer suicides concentrated in the Bt cotton belt.” The fact is that 200,000 Indian farmers have committed suicide over the past decade. However, since the arrival of Bt seeds in 2002, the price of cotton seeds raised from 7 to 1,700 rupees a bag. So Monsanto, the world’s largest seed company, disagrees as the suicide trend began well before its cotton seeds were introduced to the market. Shiva also argues that because of the self-regulatory system of labeling in India, Monsanto sells GM seeds on fraudulent claims of 1,500 kilograms a year when farmers harvest 300 to 400 kilograms a year on average. Additionally, although Bt cotton was promoted as resistant to the bollworm, it actually created new pests, and farmers were using 13 times more pesticides than they were using prior to introduction of Bt cotton. “Bio-piracy . . . where you take stuff from the Third World, claim it to be an invention of a US company, and then sell it back for a profit, and forbid the original contributors from having free access,” and Multinational Corporations are taking control of the Indian market.18 Moreover, a 2011 report published by the Center for Human Rights and Global Justice (CHRGJ) claimed the sale of expensive genetically modified seeds to rural Indian farmers was a key factor contributing to the growing suicide crisis.19
Monsanto and other producers of GM crops insist that their crops require fewer chemicals, as plants are engineered to prevent crop pests. Nevertheless, the study done by Washington State University Professor Charles Benbrook found that the usage of herbicides in GM crops—cotton, soybeans, and maize—has increased over the last decade in the United States. His study found that the herbicide-tolerant crops did not have problems but recently, so-called superweeds have become resistant to glyphosate weed killer, Roundup, produced by Monsanto. Therefore, farmers started to use increasing amount of Roundup and some more additional herbicides to fend off the tough weeds. Benbrook adds that many farmers reliant on GM crops are raising the volume of herbicide needed each year by about twenty-five percent. Estimations are that production of herbicides was increased by 239 million kilograms between 1996 and 2011 for the use of GM crops. This study undermined the claims of GM crop producers that fewer chemicals are needed in production.20
Nevertheless, according to Raju Das, a developmental studies professor at York University, “the issue of farmer suicides is not just entirely a farmer issue, or rural issue, or a village issue—it is a much more broader political-economic problem”21 In 2008, the study focusing on this issue was reported by the International Food Policy Research Institute (IFPRI). The report also writes, “Most reports tend to reflect the polarized views on Bt cotton itself, without providing a comprehensive understanding of the actual situation that led to the observed resurgence of farmer suicides in India and therefore the potential role (or absence thereof) of Bt cotton in this picture.”22
In the data found, it is evident that the high number of suicides occurred much before the introduction of Bt cotton23 and the suicides appear to have slowed down since the introduction of Bt cotton in 2002.24 Moreover, farmer suicides have been reported in developed countries such as Australia, the United States, and Great Britain and involve diverse crops, most of which are not Bt cotton. The report says:
It is not only inaccurate but simply wrong to blame the use of Bt cotton as the primary cause of farmer suicides in India…The reality is much more complex, when one considers the conditions surrounding the use of Bt cotton, the resulting effects, and the socioeconomic constraints that have likely pushed farmers in particular regions to commit suicide during some years. There is no single explanation or even consistent explanations across reported cases. However, one leading factor seems to connect several causes particularly related to agriculture: the heavy indebtedness of farm households, particularly in the suicide-prone states. 25
Figure 2. Farmer suicides and Bt cotton area in Andhra Pradesh, 1997-2006
(Gruere, Mehta-Bhatt, Sengupta, 19) Figure 3. Average economic effects of Bt cotton compared to non-Bt cotton in India, 2002/03-2004/0
Patent Law and Farmer Lawsuits
Monsanto enforces patents on the seeds they researched and developed, and gives requirements and guidelines to farmers for use of their products. But some farmers are not happy about this agreement. 26 The farmer’s position is understandable for the reasons that seeds naturally grow and increase in amount, but the seeds are the products of the company and business has to be paid for its product to survive. Nonetheless, patent law gives companies a right to exclude others from using the invention that sometimes requires a high cost for the research and development, and the rights encourage further invention and promote development. According to Monsanto, about 145 lawsuits were filed between 1997 and 2000 in the United States, an average of approximately 11 per year for 13 years among more than 250,000 American farmers using Monsanto seeds. The company invests more than \$2.6 million per day in research and development and claims that it would not be possible without the protection of the patent. Furthermore, Monsanto says it would be unfair to the farmers that honor their agreements, and most of the cases are filed from the reports from one farmer seeing another farmer’s infringement, saving patented seeds. 27 In a recent Supreme Court case, a 75-year-old farmer, Mr. Bowman, got into trouble when he planted a second crop of soybeans in the same year. What he wanted was a cheap source of seed, and in 1999, he bought some ordinary soybeans from a small grain elevator where local farmers drop off their harvest. He was aware of the probability that these beans had Monsanto’s Roundup Ready gene in them, but he also thought that Monsanto was not controlling these soybeans anymore, and got a different varieties of seeds, which hardly pose a threat to Monsanto’s seed business.28 Another defense is the concept that once a patented object is sold, the patent holder loses control over how it is used, and he was merely using the seed from the elevator and was not making seeds, as the nature of a seed is that it creates more copies. The previous courts awarded the company more than \$84,000 in 2007, and the Court of Appeals for the Federal Circuit said that Bowman had created newly infringing articles.29 In May 2013, the case came to an end with the decision ordering Bowman to pay Monsanto \$84,000 for infringing on the company’s patent. The justices ruled that “patent exhaustion does not permit a farmer to reproduce patented seeds through planting and harvesting without the patent holder’s permission.”30 Accordingly, the public has been critical of this giant company for making a poor 75-year-old farmer pay \$84,000. As a human being, people may feel sympathy for this man. However, any person who abuses patent laws will be charged a penalty, and this consequence is genuinely a rational decision. Regrettably, Bowman made a mistake.
Analysis
It would be difficult to conclude that the farmer suicide phenomenon in India is due to GM seeds, not only because of all the data shown in the study done by the International Food Policy Research Institute, but also because of the overall conditions in India, such as the culture, economy, and political system. Although the country has achieved a higher standard of living from its economic development, many people still remain poor and live in difficult conditions with a lack of infrastructure. Also, some suicidal farmers drink pesticide to kill themselves, but this has nothing to do with Monsanto and GM seeds. They have access to pesticide only because they are farmers, not because they are specifically GM crop farmers. Moreover, Monsanto sets seed prices that correspond with the market. Thus, critics should not blame Monsanto for the issue of the small percentage of farmers who have difficulty paying the company for the seeds. The reason for the suicides could be personal problems or economic problems, but perhaps Monsanto could adjust their prices if an increasing number of people suffer.
In regard to lawsuits against farmers, Monsanto could give better and clearer guidance about its patent rights, for example through the media, to increase the farmers’ understanding. About eleven lawsuits against farmers per year is not a large number. This is only 0.058 percent of the total number of Monsanto’s customer farmers. Compared to Walmart, which has 500,000 lawsuits per year for issues such as wage law violations, inadequate health care, exploitation of workers, and the retailer’s antiunion stance, Monsanto’s suits seem small in number.31 I think companies have to care for the customers, which in Monsanto’s case are the farmers, and be good to the customers so that they can continue running the business most of the time. It is unlikely that the company keeps enforcing its agribusiness which has negative effects, if there are any. For this reason, however, it will be essential for Monsanto to invent a new seed that is effective against superweeds so that farmers can reduce the amount of pesticides, since the use of pesticide on these weeds is not as effective as it is on conventional weeds.
Conclusion
Monsanto and genetic engineering have been the targets of numerous criticisms, but they have more benefits than some opponents may recognize. It would cause significant damage to people around the world, including farmers and people who are fed by GM crops, if biotechnology and Monsanto were denied, and the company stopped its incredible and hopeful research and inventions for the future. GM crops have better nutrition and help farmers to a great extent because they are economical and efficient to produce. Moreover, it is a solution to the food supply shortage caused by climate change and population increase. The facts about Monsanto involvement in farmer suicides and patent lawsuits against farmers seem overexaggerated, and a lot of incorrect information has spread to the public. However, any possible risks or issues should definitely be monitored by Monsanto because it is their responsibility to care for customers. However, these criticisms and controversies have probably been helpful to alert the company to constantly improve the technology and products. Investments and funds are necessary for further research, and logically Monsanto deserves to receive payment from farmers for the products, research, and development, which ultimately benefit the farmers.
Endnotes
1. Chris Bennett, “Indian Farmer Suicides a Case of Misplaced GM Blame,” Delta Farm Press. February 11, 2013. Agriculture Collection, http://deltafarmpress.com/blog/indian-farmer-suicides-case-misplaced-gm-blame
2. “The Pros and Cons of Genetically Modified Seeds,” Wall Street Journal, March 15, 2010, http://online.wsj.com/article/SB126862629333762259.html.
3. Chris Bennett, “Indian Farmer Suicides a Case of Misplaced GM Blame,” Delta Farm Press. February 11, 2013, Agriculture Collection, http://deltafarmpress.com/blog/indian-farmer-suicides-case-misplaced-gm-blame
4. Monsanto, E. Freeman, “Why does Monsanto Patent Seeds?”, September, 30, 2008, Accessed April 17, 2013, www.monsanto.com/newsviews/pages/why-does-monsanto-patent-seeds.aspx.
5. “What Is Genetic Engineering?” Union of Concerned Scientists, last updated July 18, 2003, www.ucsusa.org/food_and_agriculture/our-failing-food-system/genetic-engineering/what-is-genetic-engineering.html.
6. Philip Case, “Monsanto Cancer Study Not Scientifically Valid,” Farmers Weekly, October 12, 2012. Agriculture Collection. http://go.galegroup.com/ps/i.do?id=GALE%7CA306296699&v=2.1&u=fitsuny&it=r&p=PPAG&sw=w.
7. Charles M. Benbrook, “Genetically Engineered Crops and Pesticide Use in the United State: The First Nine Years,” Union of Concerned Scientists, October 2004, http://www.ucsusa.org/food_and_agriculture/our-failing-food-system/genetic-engineering/genetically-engineered-crops.html.
8. “Pros and Cons of GM Seeds.”
9. Andrew Marshall. “13.3 Million Farmers Cultivate GM Crops.” Nature Biotechnology 27, no. 3 (03, 2009): 221. doi:http://dx.doi.org/10.1038/nbt0309-221.
10. “Pros and Cons of GM Seeds.”
11. Benbrook, “Genetically Engineered Crops.”
12. “No health or environmental risks from plant biotechnology,” Swiss National Research Program, www.gmo-safety.eu/news/1424.plant-biotechnology-swiss.html
13. Mack LeMouse, “Genetically Altered Food: The Pros and Cons,” Health Guidance, accessed March 13, 2013, www.healthguidance.org/entry/11748/1/Genetically-Altered-Food-The-Pros-and-Cons.html.
14. 2011 Corporate Social Responsibility and Sustainability Report, 3. www.monsanto.com/sitecollectiondocuments/csr_reports/2011-csr.pdf
15. Ibid, 2
16. Ibid, 63
17. Bennett, “Indian Farmer Suicides.”
18. “Pros and Cons of GM Seeds.”
19. Rubab Abid, “The Myth of India’s ‘GM Genocide’: Genetically Modified Cotton Blamed for Wave of Farmer Suicides,” National Post, January 26, 2013, http://news.nationalpost.com/2013/01/26/the-myth-of-indias-gm-genocide-genetically-modified-cotton-blamed-for-wave-of-farmer-suicides/.
20. Philip Case, “US Farmers Using More Pesticides with GM Crops.” Farmers Weekly, October 26, 2012, Agriculture Collection. http://www.fwi.co.uk/arable/us-farmers-using-more-pesticides-with-gm-crops.htm
21. Quoted in Abid, “The Myth of India’s ‘GM Genocide.’”
22. Guillaume P. Gruère, Purvi Mehta-Bhatt, and Debdatta Sengupta, “Bt Cotton and Farmer Suicides in India.” Working Paper no. 00808, International Food Policy Research Institute, October 2008, http://www.ifpri.org/publication/bt-cotton-and-farmer-suicides-india, 1.
23. Ibid., 29
24. Ibid., 38
25. Ibid.
26. Monsanto, E. Freeman, “Farmers Reporting Farmers- Part 2”, October 10, 2008, www.monsanto.com/newsviews/pages/farmers-reporting-farmers-part-2.aspx
27. Ibid.
28. Mark Memmott, “Supreme Court Rules for Monsanto in Case against Farmer,” NPR, May 13, 2013, http://www.npr.org/blogs/thetwo-way/2013/05/13/183603368/supreme-court-rules-for-monsanto-in-case-against-farmer.
29. Andrew Pollack, “Farmer’s Supreme Court Challenge Puts Monsanto Patents at Risk,” The New York Times, February 16, 2013, http://www.nytimes.com/2013/02/16/business/supreme-court-to-hear-monsanto-seed-patent-case.html?pagewanted=all.
30. Mark Memmot, “Supreme Court Rules for Monsanto.”
31. “The Good, the Bad, and Wal-Mart,” Workplace Fairness, accessed April 17, 2013, http://www.workplacefairness.org/regreatports/good-bad-wal-mart/wal-mart.php. | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/02%3A_Appendix/2.03%3A_Appendix_C_-_Monsanto_Company_and_Its_Effect_on_Farmers.txt |
[These sample student papers are provided only as examples of successful student research: they are not meant to prescribe any standard paper format and the content of each paper represents purely the author’s view.]
This paper focuses on the socioeconomic impacts of fair trade on small-scale coffee producers in Latin America. The fair trade mechanism has shown some benefits to small-scale farmers on a micro-level and has been gaining firm grounds as a socially responsible initiative. This paper explores the extent to which small producers and cooperatives are primary beneficiaries of fair trade. Nevertheless, a critical approach to the fair trade mechanism and its implementation is also necessary, in order to evaluate and improve its effectiveness. The paper sets off by discussing the origin of the concept, goals, and positive impacts of fair trade. Subsequently, a discussion on the concept’s weaknesses is obtained through an assessment of the socioeconomic impacts of sustainable livelihoods, poverty alleviation, capacity building, and empowerment on a local level in Latin America. The impacts analyzed focus on the following respective areas: human, social, financial, and physical capital of the small-holder coffee producers through assessing various case studies addressing the impacts of fair trade coffee in Latin America. I conclude with an analysis of the one-way link that fair trade constructs between the consumers in developed countries and producers in developing nations, through societal marketing, which promotes ethical consumerism.
Introduction
Fair Trade1 presents an alternative to traditional forms of international aid,2 because the livelihoods of small-scale producers and communities, as well as the economic growth of developing nations, are supported through trade, as they receive a “fair” price from developing nations for the goods they produce. The founders of the fair trade concept, Nico Roozen and Frans van der Hoff, were inspired by the statement of a Mexican coffee farmer: “We are not beggars, we only need a fair price for our coffee…We want to put an end to the centuries of exploitation that we have experienced…and [gain] the (market) power to change [our] destiny.”3 This exploitation may be explained by the dependency theory, which states that the terms of trade between center, developed nations, and the periphery, developing nations, is unbalanced and unfair.4 Immanuel Wallerstein’s center-periphery model5, may be applied to analyze this relationship, as the underdeveloped Latin American coffee smallholders, the periphery, are exporting the raw material of coffee to the developed, industrialized world, the core, and, the market acts as the means by which the core exploits the periphery.6 Fair trade aims to mitigate this unfair power relationship through its sustainable initiatives.
In 1981, the Dutch foreign-aid activists founded the world’s first fair trade cooperative, the Union of Indigenous Communities in the Isthmus Region (UCIRI), in the Oaxaca region of Mexico, with the objective of fighting the root causes of persistent poverty among local coffee farmers. They adopted policies aimed at readjusting low coffee prices and reducing farmers’ heavy debts7 in order to render them more competitive on the world market. The founders went on to establish the Max Havelaar label, which successfully elevated and stabilized coffee prices in Oaxaca, Mexico, by eliminating the middleman8 and shortening the coffee production value chain. The small-scale farmers were able to receive a higher price: \$0.95 per kg of coffee instead of the previous rate of \$0.25.9 Certification programs were founded in order to ensure that ideals and standards of fair Trade are implemented, which became joined under the umbrella group known as the Fair Trade Labeling Organizations International (FLO).10
The stakeholders in the fair trade coffee network include producer groups in developing nations, umbrella organizations, buyers in developed nations, roasters, retailers, and consumers.11 The intended primary beneficiaries of the fair trade concept are small-scale producers in developing nations. The main issue that these producers face is the downward trend of coffee prices in the global market since there is an excess supply over demand for coffee. During the 1900s, the world’s coffee production has increased at an average annual rate of 3.6 percent, whereas demand has merely increased by 1.3 percent per year.12 As a result, coffee smallholders have been unable to cover their production costs and improve their livelihoods.
FLO states that fair trade standards are designed to support the sustainable development of small-scale producers and agricultural workers in the poorest countries in the world.13 Fair trade’s key objectives include ensuring that producers receive prices that cover their average costs of sustainable production; providing a fair trade premium14; investing in social, economic, and environmental development projects; enabling prefinancing for producers; facilitating long-term trading relationships; enhancing producer power over trading process; and setting clear minimum and progressive criteria to ensure that conditions of the production and trade of all fair trade certified products are socially, economically fair and environmentally responsible.15
The following section discusses the extent to which fair trade standards are effectively implemented in improving the lives of small-scale coffee producers in Latin America—the core—which supplies 78 percent of the world’s Fair Trade-certified coffee to consumers in developed nations—the periphery.16
Smallholders and Fair Trade
In order to fully evaluate the socioeconomic impacts of fair trade coffee on small-scale producers, this section uses an “asset analysis” based on four assets, or types of capital17: social, human, financial, and physical capital.18
Human Capital
The analysis on human capital focuses on capacity building, which enhances the small-scale coffee producers’ understanding, skills, and access to information, knowledge, and technical training to enable them to perform effectively to sustain and improve their livelihoods.19
The coffee cooperative union of Jinotega, Nicaragua, called Soppexcca, provides technical support to small-scale coffee farmers to achieve capacity building through workshops and direct personal assistance, which provides an opportunity for them to both adequately access the fair trade market and obtain a higher price for their coffee, and ensures that their coffee meets required quality standards.20 Furthermore, the case study has shown that capacity building of the Jinotega smallholders resulted in an increase of their competitiveness on the fair trade market.
The development of sustainable and improved livelihoods also includes improvement in human capital, related to gender equity and the role of rural women in fair trade activities.21 Improvements have been shown through the formation of Soppexcca’s Café de las Mujeres (“Women’s Coffee”), which has been encouraging an increase in women’s participation in fair trade coffee production and generating household income.
However, a case study, comparing TransFair USA (TF)22 cooperative participants and non-participating farmers in three Latin American countries on the socioeconomic indicators of well-being, education and health outcomes,23 shows varied results. The study’s path analysis does conclude that TF participation tends to have a positive influence on current participation in primary education.24 It is difficult to assess the extent to which fair trade initiatives positively impact the human capital of Latin American smallholders since numerous factors’ effects must be considered, such individual households’ priorities and cultural traditions. Nevertheless, capacity building is crucial to encouraging sustainable development, as it is necessary for smallholders, members of cooperatives, to be able to operate and make unified decisions regarding how to invest their fair trade premium most efficiently. Capacity building fosters a fairer balance in power between the fair trade coffee roasters and retailers in developing nations—the periphery—and the smallholders in Latin America—the core.
Social Capital
The evaluation of changes in the social capital of small-scale coffee farmers in Latin America examines the process of empowerment, the social recreation, levels of migration, and participation and decision making within the cooperative as well as within the community.25 Soppexcca’s organizational objectives succeeded in opening up spaces for the empowerment of their members, encouraging Jinotega smallholders to take part in events and inducing them to feel that they are part of a system that belongs to them, and establishing closer relations with the general manager of the organization as well as between buyers and cooperative members.26 The Soppexcca cooperative union has shown an increase in the engagement of the smallholders in the cooperative’s governance and decision-making, as it “consists of a general assembly and a board of directors made up of [small-scale] producer members.”27 Jinotega’s small-scale coffee producers “became part of a fair trade system, not only in events organized by their cooperative, but also at the community level.”28 Their interactions with development included involvement in “health and peace committees, sports activities, parents’ committees at school; and with national or international development NGOs operating in their regions.”29 Fair trade’s empowerment objective stresses the importance of allowing smallholders to experience unity and have their voice count in order to encourage production efficiency and sustainable livelihoods. However, the efficiency of self-governance of smallholders is debatable. The president of Soppexcca has alluded to the problem of inefficiency of many cooperatives due to, “high levels of illiteracy…low educational levels, and the lack of knowledge about how to manage legal, commercial, organizational, and fair trade requirements,”30 amongst the members and the board representatives. Furthermore, as a result of a lack of education, there is “a lack of knowledge about the international coffee market [and fair trade] and the low capacity to interpret its trend,” 31which inevitably leads to weak international negotiation power in the supply chain and reduces efficiency of small-scale coffee producers.
A case study on the Guatemalan Loma Linda Community investigates the local dynamics of the social vision of fair trade32 and addresses the significance of solidarity in contributing to sustainable livelihoods of smallholder coffee producers. The cooperative was founded in 1977 by a Spanish Catholic priest, Father Celestino, emphasizing “the significance of individual rights to livelihood and the importance of employment and access to land,”33 which challenged the power legacy of local landlords since colonial times. Furthermore, it banned middlemen and prevented the sale of land and individual commercialization of products, which permitted producers to legitimize themselves as the organized embodiment of solidarity relations.34 In the 1980s, the Loma Linda Community joined the Federation of Coffee Cooperatives of Guatemala (FEDECOCAGUA), which promoted fair trade practices and economies of scale. However, discontent amongst smallholders soon arose due to lack of circulation of information and transparency, and queries on how the fair trade premium funds were distributed to local cooperatives, as they did not seem to directly reach to local producers, resulting in discontent and political resentment against FEDECOCAGUA.35 The study reveals the problems that fair trade faces in ensuring that the fair trade premium trickles down to reach the smallholders and improve their livelihoods, and how the,“paths to fair trade generate different texts36 in a context in which people’s life worlds become fractured to embody a diversity of solidarity and fair trade categories.”37
Moreover, a case study conducted in rural region of Oaxaca, Mexico, in 2004, questions the sustainability of the fair trade–organic coffee mechanism in regard to the migration opportunities.38 The study explains that the increased trend in migration of labor in the Cabeza del Rio community in search of greater opportunities abroad has caused “wages [to double] in five years…[while] the fixed price of fair trade coffee had not risen in over ten years.”39 This raises the question of how efficient the FLO and Fair Trade certifiers are in investigating and ensuring that the fair trade coffee price and premium amount paid to smallholders adequately meets the minimum living standards of smallholders and provides poverty alleviation.
Financial Capital
An examination of the financial capital40 reveals the contribution fFair trade has had on raising the living standards of small-scale coffee producers in Latin America.41 In theory, fair trade provides a stable coffee price and a premium to small-scale producers to effectuate poverty alleviation. Additionally, it encourages local smallholders to compete in production of quality coffee. However, it is important to investigate these claims more critically and question the extent to which the fair trade premium (USD\$0.010)42 benefits and alleviates small-scale producers from poverty.
A study focusing on smallholders in Jinotega, Nicaragua, reveals that one disadvantage of trading with fair trade organizations is that they use the “open account payment” method, which does not offer immediate payment for each sack of coffee delivered.43 This has shown to create the risk that some producers will breach contracts, especially when the international price of coffee is similar to the fair trade price agreed upon when the contract was signed, in order to receive their payment immediately.44 This behavior also causes trade relationships between the smallholders and their cooperatives and the international buyers to suffer, and weakens the international negotiation power of the coffee smallholders.
Furthermore, the extent to which the fair trade price paid to smallholders is fair is debatable. Even though the smallholders in Jinotega, Nicaragua, are able to attain a higher price—“4.5 times [higher] than before they joined the fair trade system”45—for their coffee through Fair Trade certification, are they the primary beneficiary of the elevated fair trade price?
Figure 146
Table 147
The following study investigates the fair trade coffee trade between Nicaraguan smallholders and Finnish consumers, by questioning how efficient fair trade is in redistributing wealth from consuming countries to producing ones.48 This alludes to the coffee paradox theory that argues that the global coffee business is creating wealth in the consuming countries—the core—while smallholder farmers and laborers in developing nations—the periphery—are exploited and remain in poverty.49 It is questionable whether fair trade mainly empowers roasters and retailers50 rather than small-scale coffee producers. The study assesses what percentage of the final retail price paid by consumers in the developing nation, in this case Finland, actually goes to the small-scale coffee producers in Nicaragua. The Finnish customs statistics estimate that “the average price paid for all green coffee imported to Finland in 2006 [was €1.95 per kilogram and]…estimates a transportation and insurance cost of €0.07 per kilogram of green coffee.”51 Additionally, the study estimates that approximately 1 percent of the retail price paid by Finnish consumers goes to international coffee trade stakeholders: export companies or trading houses. Table 1 and Figure 1 provide evidence that a higher portion, 60 percent, of the final retail price for fair trade coffee goes to consumer country than the producer country, which receives merely 35 percent. On the other hand, the purchase of conventional coffee resulted in 50 percent of the retail price going to the consumer country and 48 percent going to the producer country. The study explains that retailers’ reason for taking very low margins from their conventional coffee sales is to attract customers.52 The Finnish retailers or roasters charged significantly higher margins for fair trade coffee than for conventional coffee, and thus a greater portion of the premiums paid by fair trade consumers, the ethical donations, remains in Finland, the consuming nation, rather than being transferred to the Nicaraguan coffee smallholders, as fair trade initiatives advocate.53 As a result, it may be concluded that fair trade is inefficient in redistributing the wealth from the developed consuming nations—the periphery—to the developing nations—the core—as a greater portion of the fair trade retail price remains in the consuming nation. It is arguable to what extent this claim is valid, as the study does not mention whether the difference in purchasing power in Nicaragua and Finland is considered.
Furthermore, it is interesting to note that smallholder members of coffee cooperatives only sell a part of their coffee supply to fair trade markets, since the volatile coffee price may be periodically higher in mainstream markets than in cooperatives.54 This was the case during the harvest season of 2005–2006 in Nicaragua during which the Exportadora Atlantic, SA, paid an average of USD\$0.83 per pound of coffee while the Fair Trade certified cooperative merely paid an average of USD\$0.06 more per pound of coffee. Yet, there were times when the export company offered a higher price.55 It must also be taken into account that Fair Trade certified cooperatives also deduct a portion from the price sold to cover operational certification costs, which were 5.5 cents per pound of exported coffee in 2005–200656 and thus don’t receive full the minimum fair trade price for all their produced coffee.
Moreover, the French critic Christian Jacquiau’s controversial book, Les coulisses du commerce equitable, criticizes the effectiveness of fair trade and the Max Havelaar Foundation, questioning “how much of that money ends up in the pockets of farmers in developing countries.”57 Jacquiau states, “There are 54 inspectors around the world, working on a part-time freelance basis to check and control a million producers. These checks do not take place on the ground but in offices, hotel rooms, or even by fax.”58 He refutes Max Havelaar’s claim that, “€50 million (SFr79 million) has been distributed among small farmers…[while] the organization claims to work with a million producers.”59He states, “Here the dream falls apart. [Producers] therefore each receive just €50 a year—or €4 a month.”60 Jacquiau’s claims have raised debates as to whether fair trade’s higher prices and standards are effective in alleviating the poverty of the small-scale coffee producers and encouraging sustainable livelihoods.
Physical Capital
Finally, the improvement of Latin American small-scale coffee producers’ livelihood is further assessed by addressing their physical capital. Fair trade and other ethical certifications aim to facilitate exchange and protect health and safety61 of workers; however, “developing countries might suffer from structural bottlenecks,”62 to comply with these standards. These bottlenecks often involve lack of adequate infrastructure, processing technologies, and national regulatory bodies.63
The case study of Jinotega’s smallholders and community demonstrates weaknesses in efficiently in investing the premium funds to enhance the local infrastructure. Premium funds have shown to be used “for disjointed, ad hoc projects [that] may not have optimized the potential benefit of such funds.”64 Soppexcca’s social project cocoordinator explains that this is because funds collected from the air trade social premium are insufficient to consider larger community development work such as improving road infrastructure and water and electricity services.65 In addition to an insufficient amount of funding, there is also a limited or even a lack of government support.66 The lack of adequate physical services such as communication and electricity in most rural communities in Jinotega, Nicaragua, makes it difficult for smallholders high in the mountains and Soppexcca to communicate, through the radio or paper leaflets sent by bus.67 The existence of inefficient modes of communication hinders transparency and open communication between the cooperative administrations and the small-scale coffee producers in order to ensure efficiency of fair trade premium–financed projects.
From these case studies, it can be deduced that the fair trade premium is good concept; however, more thorough investigation by FLO is required to ensure that the amount of fair trade premium paid to smallholders is sufficient to finance projects to develop the physical capital and infrastructure of the communities.
Smallholders and Consumers
Having analyzed the link between Latin American smallholder coffee producers and fair trade retailers and roasters in light of the dependency theory, this section examines the link that fair trade constructs between the Latin American small-scale coffee producers and the consumers in developing nations. The weaknesses of the implementation of fair trade initiatives revealed in research results have raised the question whether fair trade is merely a societal marketing68 strategy that promotes ethical/green consumption.69 Fair trade seems to create a mode of connectivity to strengthen producer–consumer relationships70 by offering consumers an opportunity to donate to charity at a distance.71
It is debatable whether Alternative Trading Organizations such as FLO are successful in altering power relationships between producers and consumers or whether they are merely another profit-making business that promotes consumerism.72 The case study conducted on the fair trade coffee trade between Finland and Nicaragua provides supporting evidence to the coffee paradox theory’s claim that the global coffee business is creating wealth in the consuming countries—the core—while smallholder farmers and laborers in developing nations—the periphery—are exploited and remain in poverty.73 The study demonstrates that a greater percentage of the final retail coffee prices actually goes to the consuming nation instead of the producer nation. The artificial bond created between consumers and the small-scale coffee producers through societal marketing’s visuals gains the sympathy of consumers and makes them believe they are being socially responsible citizens by purchasing ethical products to support the less fortunate smallholder producers.
The coffee commodity is demystified, “as the hidden layers of information are peeled away to reveal the social and environmental conditions of the commodity’s production,”74 with visual presentations of smallholders and their farms. Yet one must question to what extent the information provided is accurate. The examination of fair trade product packaging has revealed that fair trade seems to apply deceptive packaging to attract consumers, as there are subtle differences in fair trade labeling among the different certifiers, Institute for Marketecology (IMO) and FLO, that define whether the product is Fair Trade Lite75 certified or Whole Product76 certified. The IMO claims to distinguish the Whole Product from a Fair Trade Lite product by placing the IMO Fair Trade label for a whole product on the front of the certified product’s packaging while the Fair Trade Lite label must be placed on the back. Nevertheless, the FLO labels the Fair Trade Lite and Whole Products in exactly the same manner, which provides ambiguity of the extent a product is fair trade. The fair trade product packaging of the Organic Very Dark Chocolate (71% Cacao) bar by Equal Exchange77 demonstrated inconsistencies in labeling, since the back side states: “By weight 100% Fair Trade content” and “Fair Trade and Social certified by IMO.” This does not adhere to IMO’s certification guideline that a Whole Product label must be placed on the front of the product packaging. This raises the doubt about how efficient the Fair Trade certifiers are in ensuring that products are labeled correctly and how they collaborate with fair trade advocates such as Equal Exchange. Additionally, a subtle difference exists between fair trade membership, which certifies a company’s commitment to fair trade principles, and Fair Trade certification, which is “certification…of the supply chains of specific products.”78 The distinction is one that consumers tend to overlook.
Fair trade consumption may be regarded as a means of encouraging altruistic79 behavior, as the consumer is manipulated to believe that through a simple purchase of a fair trade product he or she is donating for a greater cause, or “shopping for a better world.”80 Fair trade products have become “ethical luxury” goods”81 that allow consumers to reflect their political, socially responsible values in society. Consequentially, ethical/green consumption seems to act as justification for our overconsumption.
Furthermore, it is interesting to note that fair trade’s link between smallholder producers in Latin America and consumers in the developed nations merely provides a one-way flow of information. Small-scale farmers often lack the knowledge about the consumers and the coffee market. A survey interviewing cooperative members on their understanding of fair trade demonstrated that merely three of fifty-three surveyed members regarded fair trade as a means of building relationships with foreign consumers or coffee roasters, and that they primarily viewed fair trade as a market transaction paying slightly higher prices than conventional coffee markets.82 Ultimately, the strongest, most beneficial link provided by fair trade seems to be the bond created between the small-scale producers and the roasters, as cooperative membership has shown to encourage capacity building and provide information about international coffee market trends. Capacity building plays a crucial role in enabling small-scale producers to invest their fair trade premiums efficiently to improve their livelihoods and international negotiating power.
Conclusion
This paper has revealed the benefits and weaknesses of the fair trade concept as a tool of international development. The in-depth analysis of the link that fair trade constructs between roasters and retailers in consuming nations and small-scale coffee producers in Latin America is compared to the link formed between the consumers in developed nations and the smallholders, through fair trade societal marketing. The research conducted has shown that, although the fair trade mechanism is a valid method of promoting sustainable development in developing countries, its implementation in developing nations and marketing should be more thoroughly refined. This would enhance its efficiency in promoting sustainable development and enhancing consumer credibility and support. We can conclude that the most beneficial link, provided by the fair trade mechanism, is the direct relationship link it creates between the small-scale producers and the roasters. Cooperative membership has shown improvements in the capacity of the smallholder’s human capital, which is vital to achieving sustainable development and improving the international negotiation power of the smallholders on the coffee market.
Endnotes
1. There is an important difference between the terms free trade and fair trade. Free trade is defined as the general openness to exchange goods and information between and among nations with few-to-no barriers-to-trade, whereas fair trade refers to exchanges, the terms of which meet the demands of justice. (Jeffrey Eisenberg, “Free Trade vs. Fair Trade,” Global Envision, October 26, 2005, www.globalenvision.org/library/15/834)
2. Ibid., 453.
3. Ibid.
4. Ibid.
5. Wallerstein’s model applies “a zero-sum game analysis of international trade… This model characterized the world system as a set of mechanisms which redistributes resources from the periphery to the core.” (Mine Aysen Doyran, “Latin America,” 2010: 8).
6. Ibid.
7. Jan Van der Kaaj, “Building a Sustainable Profitable Business: Fair Trade Coffee (A),” International Institute for Management Development, 2003, 2.
8. The “middleman” refers to local traders who monopolized the market. (Taken from Van der Kaaj, “Building a Sustainable Profitable Business (A),” 3.
9. Ibid.
10. Eric J. Arnould, Alejandro Plastina, and Dwayne Ball, “Does Fair Trade Deliver on Its Core Value Proposition? Effects on Income, Educational Attainment, and Health in Three Countries,” Journal of Public Policy & Marketing, 28, no. 2 (2009): 187.
11. Sarah Lyon, “Evaluating Fair Trade Consumption: Politics, Defetishization and Producer Participation,” International Journal of Consumer Studies, 30, no. 5 (2006): 453.
12. Jan Van der Kaaj, “Building a Sustainable Profitable Business: Fair Trade Coffee (C),” International Institute for Management Development, 2003, 6
13. “Aims of Fairtrade Standards, 2010,” Fair Trade Labeling Organizations International, December 5, 2010, www.fairtrade.net/aims-of-fairtrade-standards.html.
14. “A Fairtrade Premium of US\$ 20 cents per pound is added to the purchase price and is used by producer organizations for social and economic investments at the community and organizational level” (“Benefits of fair trade for producers,”http://www.fairtrade.net/coffee.html).
15. Ibid.
16. Of the 78 percent of Latin American fair trade coffee, Mexico, Peru, Guatemala, Colombia, and Nicaragua are the largest exporters. (Joni Valkila, Perti Haparanta, and Nina Niemi, “Empowering Coffee Traders? The Coffee Value Chain from Nicaraguan Fair Trade Farmers to Finnish Consumers,” Journal of Business Ethics, 97 (2010): 257).
17. “In classical economics, capital is one of three factors of production, the others being land and labour. Goods with the following features are capital: It can be used in the production of other goods (this is what makes it a factor of production). It is human-made, in contrast to “land,” which refers to naturally occurring resources such as geographical locations and minerals. It is not used up immediately in the process of production, unlike raw materials or intermediate goods.” (http://www.wordiq.com), accessed 2010
18. Karla Utting, “Assessing the Impact of Fair Trade Coffee: Towards an Integrative Framework.”Journal of Business Ethics,86 (2009): 129.http://dx.doi.org/10.1007/s10551-008-9761-9
19. Ibid., 136.
20. Ibid.
21. Ibid.
22. TF is “a third-party certifier [who] audits the supply chains of specific products from point of origin to point-of-sale against fair trade criteria…” ( “Reference Guide to Fair Trade Certifiers and Membership Organizations,”For a Better World: Issues & Challenges in Fair Trade, Issue 1, Fall 2010.)
23. Eric J. Arnould, Alejandro Plastina, and Dwayne Ball, “Does Fair Trade Deliver on Its Core Value Proposition? Effects on Income, Educational Attainment, and Health in Three Countries,”Journal of Public Policy & Marketing, 28, no. 2 (2009): 186.
24. Ibid.,198.
25. Utting, “Assessing the Impact,”136.
26. Ibid., 137.
27. Ibid., 140.
28. Ibid., 137.
29. Ibid., 137.
30. Ibid., 140.
31. Ibid.
32. Alberto Arce, “Living in Times of Solidarity Fair Trade and the Fractured Life Worlds of Guatemalan Coffee Farmers, ” Journal of International Development, 21(2009): 1033.
33. Ibid., 1033–34.
34. Ibid., 1034.
35. Ibid.
36. “The term text ‘refers not to script alone, but any articulation of intelligibility, that is to say, of being’ (Michael Schatzki, Site of the Social: A Philosophical Account of the Constitution of Social Life and Change, Penn State Press, 2010, p.61.) Text is used here to encompass narratives, discourses, and speech-acts as languages of performance, weaving distinctions from differences in peoples’ diverse interpretations that constitute the fabric of solidarity and fair trade. This refers to the etymological root of the three meaning of the term ‘text’: generate, hit, and prepare, orienting the performance of networks and socially expressing different kinds of solidarity and the tasks involved in the coordination of fair trade and its involvement within social life.” (Arce, “Living in Times of Solidarity,” 1037, note 9.)
37. Ibid., 1036-7.
38. Jessica Lewis and David Runsten, “Is Fair Trade-Organic Coffee Sustainable in the Face of Migration? Evidence from an Oaxacan Community,” Globalizations, 5, no. 2 (2008): 275.
39. Ibid., 287.
40. Examining “financial capital” refers to the “financial resources used to support livelihood and [examine] how fair trade producers’ financial assets have changed over time.” (Utting, “Assessing the Impact,” 138).
41. Ibid., 138.
42. “Coffee: Benefits of Fair Trade for Producers,” Fair Trade Labeling Organization, 2010, http://www.fairtrade.net/coffee.html.
43. In this method, “buyers pay upon delivery of supply of coffee, which may take up to…four months”. Utting, “Assessing the Impact,” 139.
44. Utting, “Assessing the Impact,”139.
45. Ibid.
46. Joni Valkila, Perti Haparanta, and Nina Niemi, “Empowering Coffee Traders? The Coffee Value Chain from Nicaraguan Fair Trade Farmers to Finnish Consumers,” Journal of Business Ethics, 97 (2010): 266.
47. Ibid., 266.
48. Ibid., 257.
49. Ibid., 259.
50. Ibid., 257.
51. Ibid., 265.
52. Ibid., 266.
53. Ibid.
54. Ibid., 263.
55 Ibid.
56. Ibid., 264.
57. Ian Hamel, “Fair Trade Firm Accused of Foul Play,”Swiss Info, August 3, 2006, http://www.swissinfo.ch/eng/fair-trade-firm-accused-of-foul-play/5351232
58. Ibid.
59. Ibid.
60. Ibid.
61. Joseph E. Stiglitz and Andrew Charlton, Fair Trade for All (New York: Oxford University Press Inc., 2005), 211.
62. Ibid., 211.
63. Ibid., 212.
64. Utting, “Assessing the Impact,”138.
65. Ibid.
66. Ibid.
67. Ibid.
68. “Societal marketing emphasizes several aspects of responsible marketing, beyond simply focusing on the process of maximizing consumer purchasing. Societal marketing extends ahead of the company’s needs and seeks to meet the customer’s needs and societal needs. This allows for more sustainable success rather than short-term accomplishment.” (J. R. Ericson, “About Societal Marketing,” eHow, http://www.ehow.com/about_4571318_societal-marketing.html.) Accessed 2010.
69. Ethical consumerism or green consumption is defined as the consumption trend that reflects an increased concern and feeling of responsibility for society, which has led to remarkable growth in the global market for environment-friendly products. (Nina Mazar and Chen-Bo Zhong, “Do Green Products Make Us Better People?”Psychological Science, 21, no. 4 (August 27, 2009): 494–498. )
70. Lyon, “Evaluating Fair Trade Consumption,” 457.
71. Ibid.
72. Arnould, Plastina, and Ball, “Does Fair Trade Deliver?” 199.
73. Ibid., 259.
74. Lyon, “Evaluating Fair Trade Consumption,” 457.
75. A Fair Trade Lite product is afair trade product that contains 20% minimum fair trade content, “made with single/some Fair frade ingredients.” ( Nasser Abufahra, “How Do you Know It’s Really Fair Trade?” For a Better World: Issues & Challenges in Fair Trade, 1(Fall 2009): 6.)
76. There is a “50% [fair trade] content minimum for ‘whole product’ [Fair Trade] certification…”(Abufahra, “How Do you Know?” 6).
77. “Equal Exchangeis a for-profitFairtradeworker-owned, cooperative headquartered inWest Bridgewater, Massachusetts. Equal Exchange distributesorganic, gourmetcoffee,tea,sugar,cocoa, andchocolatebars produced byfarmer cooperativesinLatin America,Africa,andAsia. Founded in 1986, it is the oldest and largest Fair Trade coffee company in the United States.” “Equal Exchange: About Our Co-Op”Equal Exchange, Inc.Accessed 2010.www.equalexchange.coop
78. “Reference Guide to Fair Trade Certifiers,” 4.
79. Altruism is a helping behavior that is motivated by a selfless concern for the welfare of another person. (https://www.psychologytoday.com/basics/altruism).
80. Ibid.
81. Valkila, Haparanta, and Niemi. “Empowering Coffee Traders?” 259.
82. Lyon, “Evaluating Fair Trade Consumption,” 458. | textbooks/biz/Business/Business_Ethics/Book%3A_Good_Corporation_Bad_Corporation_-_Corporate_Social_Responsibility_in_the_Global_Economy_(Pulos_and_Jimenez)/02%3A_Appendix/2.04%3A_Appendix_D_-_To_What_Extent_Are_Small-Scale_Coffee_Produce.txt |
Chapter 1 defines business ethics and sketches how debates within the field happen. The history of the discipline is also considered, along with the overlap between business and personal ethics.
01: What is Business Ethics
Learning Objectives
1. Define the components of business ethics.
2. Outline how business ethics works.
Captive Customers
Ann Marie Wagoner studies at the University of Alabama (UA). She pays \$1,200 a year for books, which is exasperating, but what really ticks her off is the text for her composition class. Called A Writer’s Reference (Custom Publication for the University of Alabama), it’s the same Writer’s Reference sold everywhere else, with slight modifications: there are thirty-two extra pages describing the school’s particular writing program, the Alabama A is emblazoned on the front cover, there’s an extra \$6 on the price tag (compared with the price of the standard version when purchased new), and there’s an added sentence on the back: “This book may not be bought or sold used.” The modifications are a collective budget wrecker. Because she’s forced to buy a new copy of the customized Alabama text, she ends up paying about twice what she’d pay for a used copy of the standard, not-customized book that’s available at Chegg.com and similar used-book dealers.
For the extra money, Wagoner doesn’t get much—a few additional text pages and a school spirit cover. Worse, those extra pages are posted free on the English department’s website, so the cover’s the only unambiguous benefit. Even there, though, it’d be cheaper to just buy a UA bumper sticker and paste it across the front. It’s hard to see, finally, any good reason for the University of Alabama English Department to snare its own students with a textbook costing so much.
Things clear up when you look closely at the six-dollar difference between the standard new book cost and the customized UA version. Only half that money stays with the publisher to cover specialized printing costs. The other part kicks back to the university’s writing program, the one requiring the book in the first place. It turns out there’s a quiet moneymaking scheme at work here: the English department gets some straight revenue, and most students, busy with their lives, don’t notice the royalty details. They get their books, roll their eyes at the cash register, and get on with things.
Wagoner noticed, though. According to an extensive article in the Wall Street Journal, she calls the cost of new custom books “ridiculous.” She’s also more than a little suspicious about why students aren’t more openly informed about the royalty arrangement: “They’re hiding it so there isn’t a huge uproar.” John Hechinger, “As Textbooks Go ‘Custom,’ Students Pay: Colleges Receive Royalties for School-Specific Editions; Barrier to Secondhand Sales,” Wall Street Journal, July 10, 2008, accessed May 11, 2011, http://online.wsj.com/article/SB121565135185141235.html.
While it may be true that the Tuscaloosa university is hiding what’s going on, they’re definitely not doing a very good job since the story ended up splattered across the Wall Street Journal. One reason the story reached one of the United States’ largest circulation dailies is that a lot of universities are starting to get in on the cash. Printing textbooks within the kickback model is, according to the article, the fastest growing slice of the \$3.5 billion college textbook market.
The money’s there, but not everyone is eager to grab it. James Koch, an economist and former president of Old Dominion University and the University of Montana, advises schools to think carefully before tapping into customized-textbook dollars because, he says, the whole idea “treads right on the edge of what I would call unethical behavior. I’m not sure it passes the smell test.” John Hechinger, “As Textbooks Go ‘Custom,’ Students Pay: Colleges Receive Royalties for School-Specific Editions; Barrier to Secondhand Sales,” Wall Street Journal, July 10, 2008, accessed May 11, 2011, http://online.wsj.com/article/SB121565135185141235.html.
What Is Business Ethics?
What does it mean to say a business practice doesn’t “pass the smell test”? And what would happen if someone read the article and said, “Well, to me it smells all right”? If no substance fills out the idea, if there’s no elaboration, then there probably wouldn’t be much more to say. The two would agree to disagree and move on. Normally, that’s OK; no one has time to debate everything. But if you want to get involved—if you’re like Wagoner who sounds angry about what’s going on and maybe wants to change it—you’ll need to do more than make comments about how things hit the nose.
Doing business ethics means providing reasons for how things ought to be in the economic world. This requires the following:
• Arranging values to guide decisions. There needs to be a clearly defined and well-justified set of priorities about what’s worth seeking and protecting and what other things we’re willing to compromise or give up. For example, what’s more important and valuable: consumers (in this case students paying for an education) getting their books cheaply or protecting the right of the university to run the business side of its operation as it sees fit?
• Understanding the facts. To effectively apply a set of values to any situation, the situation itself must be carefully defined. Who, for example, is involved in the textbook conflict? Students, clearly, as well as university administrators. What about parents who frequently subsidize their college children? Are they participants or just spectators? What about those childless men and women in Alabama whose taxes go to the university? Are they involved? And how much money are we talking about? Where does it go? Why? How and when did all this get started?
• Constructing arguments. This shows how, given the facts, one action serves our values better than other actions. While the complexities of real life frequently disallow absolute proofs, there remains an absolute requirement of comprehensible reasoning. Arguments need to make sense to outside observers. In simple, practical terms, the test of an ethical argument resembles the test of a recipe for a cook: others need to be able to follow it and come to the same result. There may remain disagreements about facts and values at the end of an argument in ethics, but others need to understand the reasoning marking each step taken on the way to your conclusion.
Finally, the last word in ethics is a determination about right and wrong. This actual result, however, is secondary to the process: the verdict is only the remainder of forming and debating arguments. That’s why doing ethics isn’t brainwashing. Conclusions are only taken seriously if composed from clear values, recognized facts, and solid arguments.
Bringing Ethics to Kickback Textbooks
The Wall Street Journal article on textbooks and kickbacks to the university is a mix of facts, values, and arguments. They can be sorted out; an opportunity to do the sorting is provided by one of the article’s more direct assertions:
Royalty arrangements involving specially made books may violate colleges’ conflict-of-interest rules because they appear to benefit universities more than students.
A conflict of interest occurs when a university pledges to serve the interest of students but finds that its own interest is served by not doing that. It doesn’t sound like this is a good thing (in the language of the article, it smells bad). But to reach that conclusion in ethical terms, the specific values, facts, and arguments surrounding this conflict need to be defined.
Start with the values. The priorities and convictions underneath the conflict-of-interest accusation are clear. When a university takes tuition money from a student and promises to do the best job possible in providing an education to the student, then it better do that. The truth matters. When you make a promise, you’ve got to fulfill it. Now, this fundamental value is what makes a conflict of interest worrisome. If we didn’t care about the truth at all, then a university promising one thing and doing something else wouldn’t seem objectionable. In the world of poker, for example, when a player makes a grand show of holding a strong hand by betting a pile of chips, no one calls him a liar when it’s later revealed that the hand was weak. The truth isn’t expected in poker, and bluffing is perfectly acceptable. Universities aren’t poker tables, though. Many students come to school expecting honesty from their institution and fidelity to agreements. To the extent these values are applied, a conflict of interest becomes both possible and objectionable.
With the core value of honesty established, what are the facts? The “who’s involved?” question brings in the students buying the textbooks, the company making the textbooks (Bedford/St. Martin’s in Boston), and the University of Alabama. As drawn from the UA web page, here’s the school’s purpose, the reason it exists in the first place: “The University of Alabama is a student-centered research university and an academic community united in its commitment to enhancing the quality of life for all Alabamians.”
Moving to the financial side, specific dollar amounts should be listed (the textbook’s cost, the cost for the noncustomized version). Also, it may be important to note the financial context of those involved: in the case of the students, some are comfortably wealthy or have parents paying for everything, while others live closer to their bank account’s edge and are working their way through school.
Finally, the actual book-selling operation should be clearly described. In essence, what’s going on is that the UA English Department is making a deal with the Bedford/St. Martin’s textbook company. The university proposes, “If you give us a cut of the money you make selling textbooks, we’ll let you make more money off our students.” Because the textbooks are customized, the price goes up while the supply of cheap used copies (that usually can be purchased through the Internet from stores across the nation) goes way down. It’s much harder for UA students to find used copies, forcing many to buy a new version. This is a huge windfall for Bedford/St. Martin’s because, for them, every time a textbook is resold used, they lose a sale. On the other side, students end up shelling out the maximum money for each book because they have to buy new instead of just recycling someone else’s from the previous year. Finally, at the end of the line there is the enabler of this operation, the English department that both requires the book for a class and has the book customized to reduce used-copy sales. They get a small percentage of Bedford/St. Martin’s extra revenue.
With values and facts established, an argument against kickback textbooks at Alabama can be drawn up. By customizing texts and making them mandatory, UA is forcing students to pay extra money to take a class: they have to spend about thirty dollars extra, which is the difference between the cost of a new, customized textbook and the standard version purchased used. Students generally don’t have a lot of money, and while some pass through school on the parental scholarship, others scrape by and have to work a McJob to make ends meet. So for at least some students, that thirty dollars directly equals time that could be spent studying, but that instead goes to flipping burgers. The customized textbooks, consequently, hurt these students’ academic learning in a measurable way. Against that reality there’s the university’s own claim to be a “student-centered” institution. Those words appear untrue, however, if the university is dragging its own students out of the library and forcing them to work extra hours. To comply with its own stated ideals—to serve the students’ interests—UA should suspend the kickback textbook practice. It’s important to do that, finally, because fulfilling promises is valuable; it’s something worth doing.
Argument and Counterargument
The conclusion that kickback textbooks turn universities into liars doesn’t end debate on the question. In fact, because well developed ethical positions expose their reasoning so openly (as opposed to “it doesn’t smell right”), they tend to invite responses. One characteristic, in other words, of good ethical arguments is that, paradoxically but not contradictorily, they tend to provoke counterarguments.
Broadly, there are three ways to dispute an argument in ethics. You can attack the
1. facts,
2. values,
3. reasoning.
In the textbook case, disputing the facts might involve showing that students who need to work a few extra hours to afford their books don’t subtract that time from their studying; actually, they subtract it from late-night hours pounding beers in dank campus bars. The academic damage done, therefore, by kickback textbooks is zero. Pressing this further, if it’s true that increased textbook prices translate into less student partying, the case could probably be made that the university actually serves students’ interests—at least those who drink too much beer—by jacking up the prices.
The values supporting an argument about kickback textbooks may, like the facts, be disputed. Virginia Tech, for example, runs a text-customization program like Alabama’s. According to Tech’s English Department chair Carolyn Rude, the customized books published by Pearson net the department about \$20,000 a year. Some of that cash goes to pay for instructors’ travel stipends. These aren’t luxury retreats to Las Vegas or Miami; they’re gatherings of earnest professors in dull places for discussions that reliably put a few listeners to sleep. When instructors—who are frequently graduate students—attend, they’re looking to burnish their curriculum vitae and get some public responses to their work. Possibly, the trip will help them get a better academic job later on. Regardless, it won’t do much for the undergraduates at Virginia Tech. In essence, the undergrads are being asked to pay a bit extra for books to help graduate students hone their ideas and advance professionally.
Can that tradeoff be justified? With the right values, yes. It must be conceded that Virginia Tech is probably rupturing a commitment to serve the undergrads’ interest. Therefore, it’s true that a certain amount of dishonesty shadows the process of inflating textbook costs. If, however, there’s a higher value than truth, that won’t matter so much. Take this possibility: what’s right and wrong isn’t determined by honesty and fidelity to commitments, but the general welfare. The argument here is that while it’s true that undergrads suffer a bit because they pay extra, the instructors receiving the travel stipends benefit a lot. Their knowledge grows, their career prospects improve, and in sum, they benefit so much that it entirely outweighs the harm done to the undergrads. As long as this value—the greatest total good—frames the assessment of kickback textbooks, the way is clear for Tech or Alabama to continue the practice. It’s even recommendable.
The final ground on which an ethical argument can be refuted is the reasoning. Here, the facts are accepted, as well as the value that universities are duty bound to serve the interests of the tuition-paying undergraduate students since that’s the commitment they make on their web pages. What can still be debated, however, is the extent to which those students may actually be benefitted by customizing textbooks. Looking at the Wall Street Journal article, several partially developed arguments are presented on this front. For example, at Alabama, part of the money collected from the customized texts underwrites teaching awards, and that, presumably, motivates instructors to perform better in the classroom, which ends up serving the students’ educational interests. Similarly, at Virginia Tech, part of the revenue is apportioned to bring in guest speakers, which should advance the undergraduate educational cause. The broader argument is that while it’s true that the students are paying more for their books than peers at other universities, the sequence of reasoning doesn’t necessarily lead from that fact to the conclusion that there’s a reproachable conflict of interest. It can also reach the verdict that students’ educational experience is improved; instead of a conflict of interest, there’s an elevated commitment to student welfare inherent in the kickback practice.
Conclusion. There’s no irrefutable answer to the question about whether universities ought to get involved in kickback textbooks. What is clear, however, is that there’s a difference between responding to them by asserting that something doesn’t smell right, and responding by uniting facts, values, and reasoning to produce a substantial ethical argument.
Key Takeaways
• Business ethics deals with values, facts, and arguments.
• Well-reasoned arguments, by reason of their clarity, invite counterarguments.
Exercise \(1\)
1. What is the difference between brainwashing and an argument?
2. What does it mean to dispute an argument on the basis of the facts?
3. What does it mean to dispute an argument on the basis of the values?
4. What does it mean to dispute an argument on the basis of the reasoning? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/01%3A_What_is_Business_Ethics/1.01%3A_What_is_Business_Ethics.txt |
Learning Objectives
1. Distinguish the place of business ethics within the larger field of decision making.
2. Sketch the historical development of business ethics as a coherent discipline.
The Boundaries and History of Business Ethics
Though both economic life and ethics are as old as history, business ethics as a formal area of study is relatively new. Delineating the specific place of today’s business ethics involves
• distinguishing morality, ethics, and metaethics;
• dividing normative from descriptive ethics;
• comparing ethics against other forms of decision making;
• sketching some inflection points in the histories of ethics and business ethics.
Morality, Ethics, and Metaethics: What’s the Difference?
The back and forth of debates about kickback textbooks occurs on one of the three distinct levels of consideration about right and wrong. Morals occupy the lowest level; they’re the direct rules we ought to follow. Two of the most common moral dictates are don’t lie and don’t steal. Generally, the question to ask about a moral directive is whether it was obeyed. Specifically in the case of university textbooks, the debate about whether customized textbooks are a good idea isn’t morality. It’s not because morality doesn’t involve debates. Morality only involves specific guidelines that should be followed; it only begins when someone walks into a school bookstore, locates a book needed for a class, strips out the little magnetic tag hidden in the spine, and heads for the exit.
Above all morality there’s the broader question about exactly what specific rules should be instituted and followed. Answering this question is ethics. Ethics is the morality factory, the production of guidelines that later may be obeyed or violated. It’s not clear today, for example, whether there should be a moral rule prohibiting kickback textbooks. There are good arguments for the prohibition (universities are betraying their duty to serve students’ interests) and good arguments against (schools are finding innovative sources of revenue that can be put to good use). For that reason, it’s perfectly legitimate for someone like Ann Marie Wagoner to stand up at the University of Alabama and decry the practice as wrong. But she’d be going too far if she accused university administrators of being thieves or immoral. They’re not; they’re on the other side of an ethical conflict, not a moral one.
Above both morality and ethics there are debates about metaethics. These are the most abstract and theoretical discussions surrounding right and wrong. The questions asked on this level include the following: Where do ethics come from? Why do we have ethical and moral categories in the first place? To whom do the rules apply? Babies, for example, steal from each other all the time and no one accuses them of being immoral or insufficiently ethical. Why is that? Or putting the same question in the longer terms of human history, at some point somewhere in the past someone must have had a lightbulb turn on in their mind and asked, “Wait, is stealing wrong?” How and why, those interested in metaethics ask, did that happen? Some believe that morality is transcendent in nature—that the rules of right and wrong come from beyond you and me and that our only job is to receive, learn, and obey them. Divine command theory, for example, understands earthly morality as a reflection of God. Others postulate that ethics is very human and social in nature—that it’s something we invented to help us live together in communities. Others believe there’s something deeply personal in it. When I look at another individual I see in the depth of their difference from myself a requirement to respect that other person and his or her uniqueness, and from there, ethics and morality unwind. These kinds of metaethical questions, finally, are customarily studied in philosophy departments.
Conclusion. Morality is the rules, ethics is the making of rules, and metaethics concerns the origin of the entire discussion. In common conversation, the words morality and ethics often overlap. It’s hard to change the way people talk and, in a practical field like business ethics, fostering the skill of debating arguments is more important than being a stickler for words, but it’s always possible to keep in mind that, strictly speaking, morality and ethics hold distinct meanings.
What’s the Difference between Normative Ethics and Descriptive Ethics?
Business ethics is normative, which means it concerns how people ought to act. Descriptive ethics depicts how people actually are acting.
At the University of Alabama, Virginia Tech, and anywhere kickback textbooks are being sold, there are probably a few students who check their bank accounts, find that the number is low, and decide to mount their own kickback scheme: refund the entire textbook cost to themselves by sneaking a copy out of the store. Trying to make a decision about whether that’s justified—does economic necessity license theft in some cases?—is normative ethics. By contrast, investigating to determine the exact number of students walking out with free books is descriptive. So too is tallying the reasons for the theft: How many steal because they don’t have the money to pay? How many accuse the university of acting dishonestly in the first place and say that licenses theft? How many question the entire idea of private property?
The fields of descriptive ethics are many and varied. Historians trace the way penalties imposed for theft have changed over time. Anthropologists look at the way different cultures respond to thievery. Sociologists study the way publications, including Abbie Hoffman’s incendiary book titled Steal This Book, have changed public attitudes about the ethics of theft. Psychologists are curious about the subconscious forces motivating criminals. Economists ask whether there’s a correlation between individual wealth and the kind of moral rules subscribed to. None of this depends on the question about whether stealing may actually be justifiable, but all of it depends on stealing actually happening.
Ethics versus Other Forms of Decision
When students stand in the bookstore flipping through the pages of a budget buster, it’s going to cross a few minds to stick it in the backpack and do a runner. Should they? Clear-headed ethical reflection may provide an answer to the question, but that’s not the only way we make decisions in the world. Even in the face of screaming ethical issues, it’s perfectly possible and frequently reasonable to make choices based on other factors. They include:
• The law
• Prudence (practicality)
• Religion
• Authority figures
• Peer pressure
• Custom
• Conscience
When the temptation is there, one way to decide whether to steal a book is legal: if the law says I can’t, I won’t. Frequently, legal prohibitions overlap with commonly accepted moral rules: few legislators want to sponsor laws that most believe to be unjust. Still, there are unjust laws. Think of downloading a text (or music, or a video) from the web. One day the downloading may be perfectly legal and the next, after a bill is passed by a legislature, it’s illegal. So the law reverses, but there’s no reason to think the ethics—the values and arguments guiding decisions about downloading—changed in that short time. If the ethics didn’t change, at least one of the two laws must be ethically wrong. That means any necessary connection between ethics and the law is broken. Even so, there are clear advantages to making decisions based on the law. Besides the obvious one that it’ll keep you out of jail, legal rules are frequently cleaner and more direct than ethical determinations, and that clarity may provide justification for approving (or disapproving) actions with legal dictates instead of ethical ones. The reality remains, however, that the two ways of deciding are as distinct as their mechanisms of determination. The law results from the votes of legislators, the interpretations of judges, and the understanding of a policeman on the scene. Ethical conclusions result from applied values and arguments.
Religion may also provide a solution to the question about textbook theft. The Ten Commandments, for example, provide clear guidance. Like the law, most mainstream religious dictates overlap with generally accepted ethical views, but that doesn’t change the fact that the rules of religion trace back to beliefs and faith, while ethics goes back to arguments.
Prudence, in the sense of practical concern for your own well-being, may also weigh in and finally guide a decision. With respect to stealing, regardless of what you may believe about ethics or law or religion, the possibility of going to jail strongly motivates most people to pay for what they carry out of stores. If that’s the motivation determining what’s done, then personal comfort and welfare are guiding the decision more than sweeping ethical arguments.
Authority figures may be relied on to make decisions: instead of asking whether it’s right to steal a book, someone may ask themselves, “What would my parents say I should do? Or the soccer coach? Or a movie star? Or the president?” While it’s not clear how great the overlap is between decisions based on authority and those coming from ethics, it is certain that following authority implies respecting the experience and judgment of others, while depending on ethics means relying on your own careful thinking and determinations.
Urges to conformity and peer pressure also guide decisions. As depicted by the startling and funny Asch experiments (see Video Clip 1.1), most of us palpably fear being labeled a deviant or just differing from those around us. So powerful is the attraction of conformity that we’ll deny things clearly seen with our own eyes before being forced to stand out as distinct from everyone else.
Video Clip
Asch Experiments
(click to see video)
Custom, tradition, and habit all also guide decisions. If you’re standing in the bookstore and you’ve never stolen a thing in your life, the possibility of appropriating the text may not even occur to you or, if it does, may seem prohibitively strange. The great advantage of custom or tradition or just doing what we’ve always done is that it lets us take action without thinking. Without that ability for thoughtlessness, we’d be paralyzed. No one would make it out of the house in the morning: the entire day would be spent wondering about the meaning of life and so on. Habits—and the decisions flowing from them—allow us to get on with things. Ethical decisions, by contrast, tend to slow us down. In exchange, we receive the assurance that we actually believe in what we’re doing, but in practical terms, no one’s decisions can be ethically justified all the time.
Finally, the conscience may tilt decisions in one direction or another. This is the gut feeling we have about whether swiping the textbook is the way to go, coupled with the expectation that the wrong decision will leave us remorseful, suffering palpable regret about choosing to do what we did. Conscience, fundamentally, is a feeling; it starts as an intuition and ends as a tugging, almost sickening sensation in the stomach. As opposed to those private sensations, ethics starts from facts and ends with a reasoned argument that can be publicly displayed and compared with the arguments others present. It’s not clear, even to experts who study the subject, exactly where the conscience comes from, how we develop it, and what, if any, limits it should place on our actions. Could, for example, a society come into existence where people stole all the time and the decision to not shoplift a textbook carries with it the pang of remorse? It’s hard to know for sure. It’s clear, however, that ethics is fundamentally social: it’s about right and wrong as those words emerge from real debates, not inner feelings.
History and Ethics
Conflicts, along with everything necessary to approach them ethically (mainly the ability to generate and articulate reasoned thoughts), are as old as the first time someone was tempted to take something from another. For that reason, there’s no strict historical advance to the study: there’s no reason to confidently assert that the way we do ethics today is superior to the way we did it in the past. In that way, ethics isn’t like the physical sciences where we can at least suspect that knowledge of the world yields technology allowing more understanding, which would’ve been impossible to attain earlier on. There appears to be, in other words, marching progress in science. Ethics doesn’t have that. Still, a number of critical historical moments in ethics’ history can be spotted.
In ancient Greece, Plato presented the theory that we could attain a general knowledge of justice that would allow a clear resolution to every specific ethical dilemma. He meant something like this: Most of us know what a chair is, but it’s hard to pin down. Is something a chair if it has four legs? No, beds have four legs and some chairs (barstools) have only three. Is it a chair if you sit on it? No, that would make the porch steps in front of a house a chair. Nonetheless, because we have the general idea of a chair in our mind, we can enter just about any room in any home and know immediately where we should sit. What Plato proposed is that justice works like that. We have—or at least we can work toward getting—a general idea of right and wrong, and when we have the idea, we can walk into a concrete situation and correctly judge what the right course of action is.
Moving this over to the case of Ann Marie Wagoner, the University of Alabama student who’s outraged by her university’s kickback textbooks, she may feel tempted, standing there in the bookstore, to make off with a copy. The answer to the question of whether she ought to do that will be answered by the general sense of justice she’s been able to develop and clarify in her mind.
In the seventeenth and eighteenth centuries, a distinct idea of fundamental ethics took hold: natural rights. The proposal here is that individuals are naturally and undeniably endowed with rights to their own lives, their freedom, and to pursue happiness as they see fit. As opposed to the notion that certain acts are firmly right or wrong, proponents of this theory—including John Locke and framers of the new American nation—proposed that individuals may sort things out as they please as long as their decisions and actions don’t interfere with the right of others to do the same. Frequently understood as a theory of freedom maximization, the proposition is that your freedom is only limited by the freedoms others possess.
For Wagoner, this way of understanding right and wrong provides little immediate hope for changing textbook practices at the University of Alabama. It’s difficult to see how the university’s decision to assign a certain book at a certain price interferes with Wagoner’s freedom. She can always choose to not purchase the book, to buy one of the standard versions at Amazon, or to drop the class. What she probably can’t justify choosing, within this theory, is responding to the kickback textbooks by stealing a copy. Were she to do that, it would violate another’s freedom, in this case, the right of the university (in agreement with a publisher) to offer a product for sale at a price they determine.
A third important historical direction in the history of ethics originated with the proposal that what you do doesn’t matter so much as the effects of what you do. Right and wrong are found in the consequences following an action, not in the action itself. In the 1800s John Stuart Mill and others advocated the idea that any act benefitting the general welfare was recommendable and ethically respectable. Correspondingly, any act harming a community’s general happiness should be avoided. Decisions about good or bad, that means, don’t focus on what happens now but what comes later, and they’re not about the one person making the decision but the consequences as they envelop a larger community.
For someone like Wagoner who’s angry about the kickback money hidden in her book costs, this consequence-centered theory opens the door to a dramatic action. She may decide to steal a book from the bookstore and, after alerting a reporter from the student newspaper of her plan, promptly turn herself into the authorities as a form of protest. “I stole this book,” she could say, “but that’s nothing compared with the theft happening every day on this campus by our university.” This plan of action may work out—or maybe not. But in terms of ethics, the focus should be on the theft’s results, not the fact that she sneaked a book past security. The ethical verdict here is not about whether robbery is right or wrong but whether the protest stunt will ultimately improve university life. If it does, we can say that the original theft was good.
Finally, ethics is like most fields of study in that it has been accompanied from the beginning by skeptics, by people suspecting that either there is no real right and wrong or, even if there is, we’ll never have much luck figuring out the difference. The twentieth century has been influenced by Friedrich Nietzsche’s affirmation that moral codes (and everything else, actually) are just interpretations of reality that may be accepted now, but there’s no guarantee things will remain that way tomorrow. Is stealing a textbook right or wrong? According to this view, the answer always is, “It depends.” It depends on the circumstances, on the people involved and how well they can convince others to accept one or another verdict. In practical terms, this view translates into a theory of cultural or contextual relativism. What’s right and wrong only reflects what a particular person or community decides to believe at a certain moment, and little more.
The Historical Development of Business Ethics
The long philosophical tradition of ethical thought contains the subfield of business ethics. Business ethics, in turn, divides between ethics practiced by people who happen to be in business and business ethics as a coherent and well-defined academic pursuit.
People in business, like everyone else, have ethical dimensions to their lives. For example, the company W. R. Grace was portrayed in the John Travolta movie A Civil Action as a model of bad corporate behavior.Steven Zaillian (director), A Civil Action (New York: Scott Rudin, 1998), film. What not so many people know, however, is that the corporation’s founder, the man named W. R. Grace, came to America in the nineteenth century, found success, and dedicated a significant percentage of his profits to a free school for immigrants that still operates today.
Even though questions stretch deep into the past about what responsibilities companies and their leaders may have besides generating profits, the academic world began seriously concentrating on the subject only very recently. The first full-scale professional conference on academic business ethics occurred in 1974 at the University of Kansas. A textbook was derived from the meeting, and courses began appearing soon after at some schools.
By 1980 some form of a unified business ethics course was offered at many of the nation’s colleges and universities.
Academic discussion of ethical issues in business was fostered by the appearance of several specialized journals, and by the mid-1990s, the field had reached maturity. University classes were widespread, allowing new people to enter the study easily. A core set of ideas, approaches, and debates had been established as central to the subject, and professional societies and publications allowed for advanced research in and intellectual growth of the field.
The development of business ethics inside universities corresponded with increasing public awareness of problems associated with modern economic activity, especially on environmental and financial fronts. In the late 1970s, the calamity in the Love Canal neighborhood of Niagara Falls, New York, focused international attention on questions about a company’s responsibility to those living in the surrounding community and to the health of the natural world. The Love Canal’s infamy began when a chemical company dumped tons of toxic waste into the ground before moving away. Despite the company’s warnings about the land’s toxicity, residential development spread over the area. Birth defects and similar maladies eventually devastated the families. Not long afterward and on the financial front, an insider trading scandal involving the Wall Street titan Ivan Boesky made front pages, which led John Shad, former head of the Securities and Exchange Commission, to donate \$20 million to his business school alma mater for the purpose of ethics education. Parallel (though usually more modest) money infusions went to university philosophy departments. As a discipline, business ethics naturally bridges the two divisions of study since the theory and tools for resolving ethical problems come from philosophy, but the problems for solving belong to the real economic world.
Today, the most glamorous issues of business ethics involve massively powerful corporations and swashbuckling financiers. Power and celebrity get people’s attention. Other, more tangible issues don’t appear in so many headlines, but they’re just as important to study since they directly reach so many of us: What kind of career is worth pursuing? Should I lie on my résumé? How important is money?
The Personal History of Ethics
Moving from academics to individual people, almost every adult does business ethics. Every time people shake their exhausted heads in the morning, eye the clock, and decide whether they’ll go to work or just pull up the covers, they’re making a decision about what values guide their economic reality. The way ethics is done, however, changes from person to person and for all of us through our lives. There’s no single history of ethics as individuals live it, but there’s a broad consensus that for many people, the development of their ethical side progresses in a way not too far off from a general scheme proposed by the psychologist Lawrence Kohlberg.
Preconventional behavior—displayed by children, but not only by them—is about people calculating to get what they want efficiently: decisions are made in accordance with raw self-interest. That’s why many children really do behave better near the end of December. It’s not that they’ve suddenly been struck by respect for others and the importance of social rules; they just figure they’ll get more and better presents.
Moving up through the conventional stages, the idea of what you’ll do separates from what you want. First, there are immediate conventions that may pull against personal desires; they include standards and pressures applied by family and friends. Next, more abstract conventions—the law and mass social customs—assert influence.
Continuing upward, the critical stages of moral development go from recognizing abstract conventions to actively and effectively comparing them. The study of business ethics belongs on this high level of individual maturity. Value systems are held up side by side, and reasons are erected for selecting one over another. This is the ethics of full adulthood; it requires good reasoning and experience in the real world.
Coextensive with the development of ideas about what we ought to do are notions about responsibility—about justifiably blaming people for what they’ve done. Responsibility at the lowest level is physical. The person who stole the book is responsible because they took it. More abstractly, responsibility attaches to notions of causing others to do a wrong (enticing someone else to steal a book) and not doing something that could have prevented a wrong (not acting to dissuade another who’s considering theft is, ultimately, a way of acting). A mature assignment of responsibility is normally taken to require that the following considerations hold:
• The person is able to understand right and wrong.
• The person acts to cause—or fails to act to prevent—a wrong.
• The person acts knowing what they’re doing.
• The person acts from their own free will.
Key Takeaways
• Morality is the set of rules defining what ought to be done; ethics is the debate about what the rules should be; metaethics investigates the origin of the entire field.
• Normative ethics concerns what should be done, not what is done.
• Ethics is only one of a number of ways of making decisions.
• Business ethics as an academic study is a recent development in the long history of ethical reflection.
• With respect to individuals, the development of ethical thought may be studied, as well as notions of responsibility.
Exercise \(1\)
1. List two basic questions belonging to the field of morality.
2. List two basic questions belonging to the field of ethics.
3. What is one basic question belonging to the field of metaethics?
4. What is an example of normative ethics? And descriptive ethics?
5. Explain the difference between a decision based on ethics and one based on the law.
6. Explain the difference between a decision based on ethics and one based on religion.
7. List two factors explaining the recent development and growth of business ethics as a coherent discipline. | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/01%3A_What_is_Business_Ethics/1.02%3A_The_Place_of_Business_Ethics.txt |
Learning Objectives
1. Articulate two extreme views of business ethics.
2. Describe the sense in which business ethics is inevitable.
Two Extreme Views of the Business World
At the boundaries of the question about whether business ethics is necessary, there are conflicting and extreme perceptions of the business world. In graphic terms, these are the views:
• Business needs policing because it’s a dirty enterprise featuring people who get ahead by being selfish liars.
• Successful businesses work well to enrich society, and business ethicists are interfering and annoying scolds threatening to ruin our economic welfare.
A 1987 New York Times article titled “Suddenly, Business Schools Tackle Ethics” begins this way: “Insider-trading scandals in the last year have badly tarnished the reputations of some of the nation’s most prominent financial institutions. Nor has Wall Street been the only area engulfed in scandal; manufacturers of products from contraceptives to military weapons have all come under public scrutiny recently for questionable—if not actionable—behavior.” Sandra Salmans, “Suddenly, Business Schools Tackle Ethics,” New York Times, August 2, 1987, accessed May 11, 2011, http://www.nytimes.com/1987/08/02/education/suddenly-business-schools-tackle-ethics.html.
Slimy dealing verging on the illegal, the message is, stains the economic world from one end to the other. A little further into the article, the author possibly gives away her deepest feelings about business when she cracks that business ethics is “an oxymoron.”
What will business leaders—and anyone else for that matter—do when confronted with the accusation of sliminess? Possibly embrace it—an attitude facilitated by an infamous article originally published in the Harvard Business Review. In “Is Business Bluffing Ethical?,” the author suggests businessmen and women should double down on the strategy of getting ahead through deceit because if you’re in business, then everyone already knows you’re a liar anyway. And since that’s common knowledge, taking liberties with the truth doesn’t even count as lying: there’s no moral problem because that’s just the way the business game is played. In the author’s words, “Falsehood ceases to be falsehood when it is understood on all sides that the truth is not expected to be spoken—an exact description of bluffing in poker, diplomacy, and business.”Albert Carr, “Is Business Bluffing Ethical?,” Harvard Business Review 46 (January–February, 1968), 143–53.
The basic argument is strong. Ethically, dishonesty stops being reproachable—it stops being an attempt to mislead—when everyone knows that you’re not telling the truth. If it weren’t for that loophole, it’d be difficult to enjoy movies. Spiderman swinging through New York City skyscrapers isn’t a lie, it’s just fun because everyone agrees from the beginning that the truth doesn’t matter on the screen.
The problem with applying this logic to the world of commerce, however, is that the original agreement isn’t there. It’s not true that in business everyone knows there’s lying and accepts it. In poker, presumably, the players choosing to sit down at the table have familiarized themselves with the rules and techniques of the game and, yes, do expect others to fake a good hand from time to time. It’s easy to show, however, that the expectation doesn’t generally hold in office buildings, stores, showrooms, and sales pitches. Take, for example, a car advertisement claiming a certain model has a higher resale value, has a lower sticker price, or can go from zero to sixty faster than its competition. People in the market for a new car take those claims seriously. If they’re prudent, they’ll check just to make sure (an economic form of “trust but verify”), but it’s pretty rare that someone sitting in front of the TV at home chuckles and calls the claim absurd. In poker, on the other hand, if another player makes a comparable claim (“I have the highest hand at the table!”), people just laugh and tell the guy to keep drinking. Poker isn’t like business.
The argument that bluffing—lying—in business is acceptable because everyone does it and everyone knows everyone’s doing it doesn’t hold up. However, the fact that someone could seriously make the argument (and get it published in the Harvard Business Review no less) certainly provides heavy ammunition for those who believe that most high-level businesspeople—like those who read the Harvard Business Review—should have a hard time looking at themselves in the mirror in the morning.
Opposing the view that business life is corrupt and needs serious ethical policing, there’s the view that economic enterprises provide wealth for our society while correcting their own excesses and problems internally. How does the correction work? Through the marketplace. The pressures of demanding consumers force companies into reputable behavior. If a car manufacturer lies about its product, there may be a brief uptick in sales, but eventually people will figure out what’s going on, spread the word at the water cooler and on Facebook, and in the end the company’s sales will collapse. Similarly, bosses that abuse and mistreat subordinates will soon find that no one wants to work for them. Workers who cheat on expense reports or pocket money from the till will eventually get caught and fired. Of course it must be admitted that some people sometimes do get away with something, but over the long run, the forces of the economic world inexorably correct abuses.
If this vision of business reality is correct, then adding another layer of academic ethics onto what’s already going on in the real world isn’t necessary. More, those who insist on standing outside corporate offices and factory buildings preaching the need for oversight and remedial classes in morality become annoying nags. That’s especially true if the critics aren’t directly doing business themselves. If they’re ensconced in university towers and gloomy libraries, there may even be a suspicion that what really drives the call to ethics is a burning resentment of all the money Wall Street stars and captains of industry seem to make, along with their flashy cars, palatial homes, and luxurious vacations.
An issue of the Cato Institute’s Policy Report from 2000 carries an article titled “Business Ethics Gone Wrong.” It asserts that some proponents of business ethics aren’t only bothersomely envious—their resentment-fueled scolding actually threatens our collective economic welfare. Business ethics, according to the author, “is fundamentally antagonistic to capitalist enterprise, viewing both firm and manager as social parasites in need of a strong reformative hand.” Alexei M. Marcoux, “Business Ethics Gone Wrong,” Cato Policy Report 22, no. 3 (May/June 2000), accessed May 11, 2011, www.cato.org/pubs/policy_report/v22n3/cpr-22n3.html.
These reforms—burdensome regulations, prying investigations, and similar ethical interventions—threaten to gum up the capitalist engine: “If the market economy and its cornerstone, the shareholder-oriented firm, are in no danger of being dealt a decisive blow, they at least risk death by a thousand cuts.” Alexei M. Marcoux, “Business Ethics Gone Wrong,” Cato Policy Report 22, no. 3 (May/June 2000), accessed May 11, 2011, www.cato.org/pubs/policy_report/v22n3/cpr-22n3.html.
There’s a problem with this perspective on the business world. Even if, for the sake of argument, it’s acknowledged that economic forces effectively police commerce, that doesn’t mean business ethics is unnecessary or a threat to the market economy. The opposite is the case: the view that the marketplace solves most problems is an ethics. It’s a form of egoism, a theory to be developed in later chapters but with values and rules that can be rapidly sketched here. What’s most valued from this perspective is our individual welfare and the freedom to pursue it without guilt or remorse. With that freedom, however, comes a responsibility to acknowledge that others may be guided by the same rules and therefore we’re all bound by the responsibility to look out for ourselves and actively protect our own interests since no one will be doing it for us. This isn’t to confirm that all businesspeople are despicable liars, but it does mean asserting that the collective force of self-interest produces an ethically respectable reality. Right and wrong comes to be defined by the combined force of cautious, self-interested producers and consumers.
In the face of this argument defending a free-for-all economic reality where everyone is doing the best they can for themselves while protecting against others doing the same, objections may be constructed. It could be argued, for example, that the modern world is too complex for consumers to adequately protect their own interests all the time. No matter how that issue gets resolved, however, the larger fact remains that trusting in the marketplace is a reasonable and defensible ethical posture; it’s a commitment to a set of values and facts and their combination in an argument affirming that the free market works to effectively resolve its own problems.
Conclusion. It’s not true that doing business equals being deceitful, so it’s false to assert that business ethics is necessary to cure the ills of commerce. It is true that the business world may be left to control its own excesses through marketplace pressure, but that doesn’t mean business escapes ethics.
Business Ethics Is Inevitable
Business ethics is not about scolding, moralizing, or telling people to be nice. Ethics doesn’t have to be annoying or intrusive. On the other hand, it can’t just be dismissed altogether because ethics in business is unavoidable. The values guiding our desires and aspirations are there whether they’re revealed or not. They must be because no one can do anything without first wanting something. If you don’t have a goal, something you’re trying to achieve or get, then you won’t have anything to do when you get out of bed in the morning. Getting up in the morning and going, consequently, mean that you’ve already selected something as desirable, valuable, and worth pursuing. And that’s doing ethics; it’s establishing values. The only real and durable difference, therefore, between those who understand ethics and those who don’t is that the former achieve a level of self-understanding about what they want: they’ve compared their values with other possibilities and molded their actions to their decisions. The latter are doing the same thing, just without fully realizing it. The question about whether ethics is necessary, finally, becomes a false one. You can choose to not understand the ethics you’re doing (you can always drop this class), but you can’t choose to not do ethics.
Key Takeaways
• Views about the ethical nature of the business vary widely.
• Because ethics is the arrangement of values guiding our aspirations and actions, some form of ethics is unavoidable for anyone acting in the economic world.
Exercise \(1\)
1. Why might someone believe the business world needs exterior ethical monitoring and correction?
2. What is the argument that the business world can regulate itself, and why is that an ethics?
3. In your own words, why is business ethics unavoidable? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/01%3A_What_is_Business_Ethics/1.03%3A_Is_Business_Ethics_Necessary.txt |
Learning Objectives
1. Show how business ethics stretches beyond working life.
The Facebook Firing
Business ethics in some form is inescapable inside factories, office buildings, and other places where work gets done. The application of business ethics principles and guidance doesn’t stop, though, when the workday ends or outside the company door. Because our economic lives mingle so intimately with our private existences, the decisions and reasoning shaping our laboring eventually shape our lives generally. Business ethics, as the problems bedeviling Dawnmarie Souza show, provides a way to examine and make sense of a large segment of our time, both on and off the job.
Souza’s problems started when the ambulance she worked on picked up a “17.” That’s code for a psychiatric case. This particular 17, as it happened, wasn’t too crazy to form and submit a complaint about the treatment received from Souza. Since this was the second grievance the ambulance service had received on Souza in only ten days, she sensed that she’d be getting a suspension. “Looks like,” she wrote on her Facebook page later that day, “I’m getting some time off. Love how the company allows a 17 to be a supervisor.” She also referred to her real supervisor with some choice four-letter words.
A number of coworkers responded to her post with their own supportive and agreeing comments. Management responded by firing her.
The termination decision came easily to the ambulance service, American Medical Response of Connecticut, since their policy explicitly prohibited employees from identifying or discussing the company or other employees in the uncontrolled public forum that is the Internet. Around the water cooler, at home, or during weekend parties, people can say what they like. Given the semipermanent record that is the web, however, and the ambulance service’s natural inclination to protect its public image, posting there was out of bounds.
But, Souza responded, there’s no difference. If people can talk at the water cooler and parties, why can’t they post on Facebook? She’s not claiming to speak for the company, she’s just venting with a keypad instead of vocal chords.
The celebrity blogger and Facebook addict Perez Hilton came down on the company’s side: “We think Dawnmarie should be fired, and we support the company’s decision to let her go. When you post things online, it’s out there for the public to see, and it’s a sign of disloyalty and disrespect to deal with a work-related grievance in such a manner.” “Facebook-Related Firing Sparks Legal Drama!,” PerezHilton.com (blog), accessed May 11, 2011, perezhilton.com/2010-11-09-woman-fired-over-comments- she-made-about-her-boss-on-facebook-brings-about-court-case#respond.
The Reach of Business Ethics
When someone like Perez Hilton—a blogger most comfortable deriding celebrities’ bad hair days—finds himself wrapped in a business ethics debate, you’ve got to figure the discipline is pretty much unavoidable. Regardless, the Souza episode displays many of the ways business ethics connects with our nonworking existence, whether we like it or not:
• It doesn’t sound like Souza displayed any great passion about her job. Maybe she really doesn’t care that she got fired. Or maybe she cares but only because it means a lost paycheck. On the other hand, it may just have been a bad day; it’s possible that she usually gets up in the morning eager to mount the ambulance. It’s hard to know, but it’s certain that this—the decision about what we want to do with our professional lives—is business ethics. When choosing a job, what has value? The money it provides? Satisfaction from helping others? Status? Or do you just want something that gives you the most free time possible? There are no right or wrong answers, but these are all ethical decisions tangling your personal and professional lives together.
• The mix between the personal and professional on the question of one’s job tends to link tighter as people get older. Many of us define who we and others are through work. When finding out about someone new, the question—embraced by some and dreaded by others—inevitably comes up. When meeting a woman at a party, when being sent on a blind date, or when discussing old high school friends or the guy who just moved into the next-door apartment, the question hums just below the surface, and it’s never long until someone comes out and asks. Of course, for collegians and young people working part-time jobs, it doesn’t matter so much because everyone knows that where you work isn’t where you’ll end up working. Once someone hits the midtwenties, though, the question “what do you do?” starts to press and it won’t let up.
• Perez Hilton wrote that Souza displayed disloyalty to her company when she trashed the management on Facebook. The following questions are raised: What is loyalty? What is it worth? When should you feel it? When do you have a right to demand it from others? Is there any difference among loyalty to the company, to family, and to friends?
• One of Hilton’s readers posted a pithy response to Hilton in the web page’s comments section: “I bet if she were gay, and did the same exact thing, you would be singing a different tune!” Perez Hilton, it’s widely known, is about as exuberantly gay as they come. As it happens, in his line of work that orientation isn’t professionally harmful. For others, however, the revelation may be career damaging. Hilton, in fact, is despised by some in Hollywood for his habit of outing gay celebrities, people who hide part of themselves in the name of furthering their career. The business ethics question here is also a life one. Would you hide who you are to facilitate things at work? Should you? Doesn’t everyone do that to some extent and in some ways?
• Another reader posted this comment: “In the US, your employer owns you. I mean they can make you piss in a cup to check and see what you did over the weekend.” Should employers be able to change what you do over the weekend?
• A number of readers defended Souza by upholding the right to free speech—she should be able to say whatever she wants wherever she wants without fear of retribution. In response to those assertions, this was posted, “Of course we have freedom of speech. Employers also have the freedom to employ whoever they wish. Your decision is whether whatever is on your mind is more important than your job.” Does freedom of speech—or any other basic liberty—end or get conditioned when the workday begins?
• One commenter wrote, “I’m going to have to agree with the company on this one. An employer expects proper business demeanor even while off the clock.” What is “proper demeanor”? Who decides? On the basis of what?
• Many people spend eight (or more) hours a day on the job. There’s no shortage of women who see their boss more than their husband, of men who remember the birthday of the guy in the next cubicle before their own child’s. Parties tend to include workmates; companies invite clients to ball games. The sheer hours spent at work, along with the large overlaps between professional and social relationships, make separating the ethics of the office and the home nearly impossible.
• This comment is aimed right at Perez Hilton and his Internet gossip column, which wins few points for checking and confirming claims but definitely gets the juicy and embarrassing rumors out about the private lives of celebrities: “Are you insane? All you did for God knows how long is put nasty stuff up about people for the public to see as a sign of disloyalty and disrespect.” Assuming that’s a reasonable depiction of Hilton’s work, the question his career raises is: what are you willing to do to the lives of others to get yourself ahead at work?
Underlining all these questions is a distinction that’s easy to make in theory but difficult to maintain in real life. It’s one between institutional business ethics and personal business ethics. Institutional ethics in business deals with large questions in generic and anonymous terms. The rules and discussions apply to most organizations and to individuals who could be anyone. Should companies be allowed to pollute the air? What counts as a firing offense? The personal level, by contrast, fills with questions for specific people enmeshed in the details of their particular lives. If Perez Hilton has gotten rich dishing dirt on others, is he allowed to assert that others must treat their employers respectfully?
Key Takeaways
• The questions pursued by business ethics cross back and forth between professional and personal lives.
Exercise \(1\)
1. What are two reasons business ethics decisions tend to affect lives outside work?
2. What are two ways business ethics decisions may affect lives outside work? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/01%3A_What_is_Business_Ethics/1.04%3A_Facebook_and_the_Unavoidability_of_Business_Ethics.txt |
This textbook is organized into three clusters of chapters. The first group develops and explains the main theories guiding thought in business ethics. The goals are to clarify the theoretical tools that may be used to make decisions and to display how arguments can be built in favor of one stance and against others. The questions driving the chapters include the following:
• Are there fundamental rules for action that directly tell us what we ought to do? If so, are the imperatives very specific, including dictates like “don’t lie”? Or are they more flexible, more like rules broadly requiring fairness and beneficence to others?
• Are fundamental rights—especially the conviction that we’re all free to pursue the destinies we choose—the key to thinking about ethics? If we have these rights, what happens when my free pursuit of happiness conflicts with yours?
• Could it be that what we do doesn’t matter so much as the effects of what’s done? How can a framework for decisions be constructed around the idea that we ought to undertake whatever action is necessary (even lying or stealing) in order to bring about a positive end, something like the greater happiness of society overall?
• To what extent are perspectives on right and wrong only expressions of the particular culture we live in? Does it makes sense to say that certain acts—say bribery—are OK in some countries but wrong in others?
The second cluster of chapters investigates business ethics on the level of the individual. The goal is to show how the tools of ethical reasoning may be applied to personal decisions made in connection with our nine-to-five lives. The questions driving the chapters include the following:
• What values come into play when a career path is selected?
• Can I justify lying on my résumé? How far am I willing to go to get a raise or promotion?
• Besides a paycheck, what benefits will I seek at work? Money from a kickback? An office romance?
• What do I owe my employer? Is there loyalty in business, or is there nothing more than the money I’m paid and the duties I’m assigned according to my work contract?
• Do I have an obligation to report on someone else doing something I think is wrong?
• If people work for me, what responsibilities do I have toward them inside and outside the office?
• What values govern the way I hire, promote, and fire workers?
The third cluster of chapters considers institutional business ethics. These are general and sweeping issues typically involving corporations, the work environments they promote, and the actions they take in the economic world. Guiding questions include the following:
• What counts as condemnable discrimination in the workplace, and what remedies ought to be tried?
• Which attitudes, requirements, and restrictions should attach to sex and drugs in the workplace?
• Should there be limits to marketing techniques and strategies? Is there anything wrong with creating consumer needs? What relationships should corporations form with their consumers?
• Do corporations hold ethical responsibilities to the larger community in which they operate, to the people who aren’t employees or consumers but live nearby?
• Is there a corporate responsibility to defend the planet’s environmental health?
• Should the economic world be structured to produce individually successful stars or to protect the welfare of laboring collectives? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/01%3A_What_is_Business_Ethics/1.05%3A_Overview_of_The_Business_Ethics_Workshop.txt |
Gray Matters
Source: Photo courtesy of Sasha Wolff, www.flickr.com/photos/sashawolff/3388815964.
To foster ethical discussion and understanding in the workplace, the Lockheed Martin company developed a quiz for employees called “Gray Matters.” The quiz is multiple choice, with a range of points awarded (or subtracted) depending on the response. Subsequently, the approach has been adopted by a wide range of corporations. Here’s a typical question matched with its possible answers and the corresponding points:
Six months after you hired an assistant accountant who has been working competently and responsibly, you learn that she departed from the truth on her employment application: she claimed she had a college degree when she didn’t. You’re her manager; what should you do?
1. Nothing because she’s doing her job just fine. (–10 points)
2. Bring the issue to the human resources department to determine exactly how company policy determines the situation should be handled. (10 points)
3. Fire her for lying. (5 points)
4. Carefully weigh her work performance, her length of service, and her potential benefit to the company before informing anyone of what happened or making any recommendations. (0 points)
Exercise \(1\)
1. The three principle components of business ethics are facts, values, and arguments. What are the facts pertinent to an ethical evaluation of this case? Is there any information not contained in the question that you’d like to have before making a decision about what should be done?
2. From the facts and information provided, can you sketch a set of values and chain of reasoning justifying the answer that the quiz’s original authors sanctioned as the right one? (Leave the decision in the hands of the HR department and existing company policy.)
3. You get some points for C (firing her). What values and reasoning may lead to that determination?
4. According to the quiz authors, the worst answer is A. Maybe they’re wrong, though. What values and reasoning may lead to the conclusion that doing “nothing because she’s doing her job just fine” is an excellent response?
5. One of the most important questions about a situation’s facts is “who’s involved?”
• Would it be reasonable to say that, ethically, this is an issue just between you and the woman who you hired after she lied on her résumé?
• If you expand the answer about who’s involved to include other workmates at the company, as well as the company’s clients and shareholders, does that change the ethical perspective you have on what should be done with the lying (but capable) coworker?
6. What’s the difference between morality and ethics?
• Would you categorize response B (bring the issue to HR to determine exactly how company policy determines the situation should be handled) as leading to a decision more based on morality or more based on ethics? Explain.
• Would you categorize response D (carefully weigh her work performance, her length of service, and her potential benefit to the company before informing anyone of what happened or making any recommendations) as leading to a decision more based on morality or ethics? Explain.
Who Made Your iPhone?
Source: Photo courtesy of Tobias Myrstrand Leander, http://www.flickr.com/photos/s8an/5207806926/
Connie Guglielmo, a reporter for Bloomberg news services, begins an article on Apple this way: “Apple Inc. said three of its suppliers hired 11 underage workers to help build the iPhone, iPod and Macintosh computer last year, a violation it uncovered as part of its onsite audit of 102 factories.” Connie Guglielmo, “Apple Says Children Were Used to Build iPhone, iPod (Update1),” Bloomberg, February 27, 2010, accessed May 11, 2011, http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aiEeeQNHkrOY.
Her story adds details. The underage workers were fifteen in places where the minimum legal age for employment is sixteen. She wasn’t able to discover the specific countries, but learned the infractions occurred in one or more of the following: China, Taiwan, Thailand, Malaysia, Singapore, South Korea, the Czech Republic, and the Philippines.
Following the discovery, the employees were released, and disciplinary action was taken against a number of the foreign suppliers. In one case, Apple stopped contracting with the company entirely.
The story closes with this: “Apple rose \$2.62 to \$204.62 yesterday in Nasdaq Stock Market trading. The shares more than doubled last year.”
Exercise \(2\)
1. The ethical question is whether Apple ought to contract (through suppliers) fifteen-year-olds to work on factory floors. Is the fact that the stock price has been zooming up a pertinent fact, or does it not affect the ethics? Explain.
2. From the information given and reasonable assumptions about these factories and the living conditions of people working inside them, sketch an ethical argument against Apple enforcing the age workplace rule. What fundamental values underwrite the argument?
3. From the information given and reasonable assumptions about these factories and the living conditions of people working inside them, sketch an argument in favor of Apple enforcing the age workplace rule. What fundamental values underwrite the argument?
4. Within the context of the Apple situation, what’s the difference between making a decision in terms of the law and in terms of ethics?
5. Assume that in the countries where fifteen-year-olds were working, it’s customary for children even younger to earn an adult-type living.
• What is an advantage of following the local customs when making economic decisions like the one confronting Apple?
• Does the custom of employing young workers in some countries change your ethical consideration of the practice in those places? Why or why not?
6. Attributing responsibility—blaming another for doing wrong—requires that the following conditions hold:
• The person is able to understand right and wrong.
• The person acts to cause (or fails to act to prevent) a wrong.
• The person acts knowing what they’re doing.
• The person acts from their own free will.
Assuming it’s unethical for fifteen-year-olds to work factory shifts making iPhones, who bears responsibility for the wrong?
• Do the fifteen-year-olds bear some responsibility? Explain.
• Does Steve Jobs, the CEO of Apple? Explain.
• Are shareholders guilty? Explain.
• Do people who use iPhones bear responsibility? Explain.
I Swear
Since 2006, students at the Columbia Business School have been required to pledge “I adhere to the principles of truth, integrity, and respect. I will not lie, cheat, steal, or tolerate those who do.”
This is a substantial promise, but it doesn’t sound like it’ll create too many tremendous burdens or require huge sacrifices.
A somewhat more demanding pledge solidified in 2010 when a group of business school students from Columbia, Duke Fuqua, Harvard, MIT Sloan, NYU Stern, Rensselaer Lally, Thunderbird, UNC Kenan-Flagler, and Yale met to formalize the following MBA Oath:
As a business leader I recognize my role in society.
• My purpose is to lead people and manage resources to create value that no single individual can create alone.
• My decisions affect the well-being of individuals inside and outside my enterprise, today and tomorrow.
Therefore, I promise that:
• I will manage my enterprise with loyalty and care, and will not advance my personal interests at the expense of my enterprise or society.
• I will understand and uphold, in letter and spirit, the laws and contracts governing my conduct and that of my enterprise.
• I will refrain from corruption, unfair competition, or business practices harmful to society.
• I will protect the human rights and dignity of all people affected by my enterprise, and I will oppose discrimination and exploitation.
• I will protect the right of future generations to advance their standard of living and enjoy a healthy planet.
• I will report the performance and risks of my enterprise accurately and honestly.
• I will invest in developing myself and others, helping the management profession continue to advance and create sustainable and inclusive prosperity.
In exercising my professional duties according to these principles, I recognize that my behavior must set an example of integrity, eliciting trust and esteem from those I serve. I will remain accountable to my peers and to society for my actions and for upholding these standards. “The MBA Oath,” MBA Oath, accessed May 11, 2011, http://mbaoath.org/about/the-mba-oath.
Exercise \(3\)
1. The second introductory clause of the MBA Oath is “My decisions affect the well-being of individuals inside and outside my enterprise, today and tomorrow.” “The MBA Oath,” MBA Oath, accessed May 11, 2011, http://mbaoath.org/about/the-mba-oath. What’s the difference between seeing this as a positive ethical stand in favor of a broad social responsibility held by those in business, and seeing it as arrogance?
2. Looking at the MBA Oath, can you list a set of values that are probably shared by those responsible for its creation?
3. All this pledging and oathing suddenly popping up at business schools drew the attention of the New York Times, and soon after, an article appeared: “A Promise to Be Ethical in an Era of Immorality.” Leslie Wayne, “A Promise to Be Ethical in an Era of Immorality,” New York Times, May 29, 2009, accessed May 11, 2011, http://www.nytimes.com/2009/05/30/business/30oath.html. Many of the readers’ comments at the end are interesting. The commenter paulnyc writes that “most students go to MBA programs to advance their careers and to earn more money, pure and simple, and there is nothing wrong with it.” paulnyc, May 30, 2009 (10:58 a.m.), comment on Leslie Wayne, “A Promise to Be Ethical in an Era of Immorality,” New York Times, May 29, 2009, accessed May 11, 2011, community.nytimes.com/comments/www.nytimes.com/2009/05/30/business/30oath.html?sort=oldest.
• What values underlie paulnyc’s perspective?
• How is paulnyc’s vision different from the one espoused in the oath?
4. The commenter JerryNY wrote, “Greed IS good as long as it is paired with the spirit of fairness. Virtually all of the major advances in science and technology were made with greed as one of the motivating factors. Gugliemo [sic] Marconi, Alexander Graham Bell, Bill Gates, Henry Ford and Steve Jobs would not have given us the life changing technological advances of our time were it not for personal greed. Remove that element, and your class is destined for mediocrity.” JerryNY, May 30, 2009 (10:51 a.m.), comment on Leslie Wayne, “A Promise to Be Ethical in an Era of Immorality,” New York Times, May 29, 2009, accessed May 11, 2011, community.nytimes.com/comments/www.nytimes.com/2009/05/30/business/30oath.html?sort=oldest.
Is it plausible to assert that JerryNY shares most of the values of those who wrote the MBA Oath, it’s just that he sees a different business attitude as the best way to serve those values? If so, explain. If not, why not?
5. Eric writes,
I would refuse to take that oath…on principle. The idea that an individual’s proper motive should be to serve “the greater good” is highly questionable. This altruistic ethic is what supported the collectivist of communism and national socialism. If my life belongs first and foremost to “the greater good,” it follows that the greatest virtue is to live as a slave. A slave’s existence, after all, is devoted primarily for the benefit of his master. The master can be a plantation owner or a King or an oligarchy or a society that demands your servitude.
The only oath I’d be willing to take is, “I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine.” Eric, May 30, 2009 (10:35 a.m.), comment on Leslie Wayne, “A Promise to Be Ethical in an Era of Immorality,” New York Times, May 29, 2009, accessed May 11, 2011, community.nytimes.com/comments/www.nytimes.com/2009/05/30/business/30oath.html?sort=oldest.
In your own words, contrast the values the MBA Oath supporters espouse with the values the commenter Eric espouses.
6. The commenter Clyde Wynant is skeptical. He writes this about those who take the MBA Oath: “Call me hyper-cynical, but I can’t help wondering if a lot of these kids aren’t hoping that having this ‘pledge’ on their résumé might help them look good.” Clyde Wynant, May 30, 2009 (10:55 a.m.), comment on Leslie Wayne, “A Promise to Be Ethical in an Era of Immorality,” New York Times, May 29, 2009, accessed May 11, 2011, community.nytimes.com/comments/www.nytimes.com/2009/05/30/business/30oath.html?sort=oldest.
Is it unethical to take the pledge without expecting to adhere to it simply because you think it will help in your job search, or is that strategy just a different kind of ethics? Explain.
7. The commenter Mikhail is skeptical. He writes, “Give me a break…With the next upswing of the economy, these leeches will be sucking the lifeblood out of our collective economies like the champions they truly are!!! Yes, perhaps opportunistic parasites every last one of them—but really, it’s not their fault—they’re just programmed that way.” Mikhail, May 30, 2009 (10:35 a.m.), comment on Leslie Wayne, “A Promise to Be Ethical in an Era of Immorality,” New York Times, May 29, 2009, accessed May 11, 2011, community.nytimes.com/comments/www.nytimes.com/2009/05/30/business/30oath.html?sort=oldest.
When he says business school students are programmed, what does he mean? If someone is programmed to be an opportunistic parasite in business, can we blame them for what they do? If so, how? If not, who should be blamed?
8. The commenter as is skeptical. He writes, “Don’t make me laugh. If they are so concerned about the ‘greater good,’ go into teaching and nursing.” as, May 30, 2009 (10:35 a.m.), comment on Leslie Wayne, “A Promise to Be Ethical in an Era of Immorality,” New York Times, May 29, 2009, accessed May 11, 2011, community.nytimes.com/comments/www.nytimes.com/2009/05/30/business/30oath.html?sort=oldest.
Assume the MBA Oath does stress the importance of the greater good, and you too are going into the economic world with that as a privileged value. How could you respond to the argument that you really should be doing nursing or something more obviously serving the general good?
9. According to the Times, B-schoolers aren’t lining up for the MBA Oath: only about 20 percent take the pledge. How could you convince the other 80 percent to sign on?
I.M.P. (It’s My Party)
“Look at them!” he said, his eyes dancing. “That’s what it’s all about, the way the people feel. It’s not about the sellout performances and the caliber of the bands who appear here. It’s about the people who buy tickets, having a good time.” Avis Thomas-Lester, “A Club Owner’s Mojo,” Washington Post, December 28, 2009, accessed May 11, 2011, http://views.washingtonpost.com/on-success/what-it-takes/2009/12/seth_hurwitz.html.
Source: Photo courtesy of Kevin Dooley, http://www.flickr.com/photos/pagedooley/4530723795/.
That’s Seth Hurwitz quoted in the Washington Post, talking about his 9:30 Club, a small venue playing over-the-hill bands on the way down, and fresh acts scratching their way up.
The story’s curious detail is that even though Hurwitz calls his company I.M.P. (It’s My Party), he doesn’t spend much time at his club. In fact, he’s almost never there. Part of the reason is that his workday begins at 6 a.m., so he’s actually back in bed preparing for the next day before his enterprise gets going in earnest each night. His job is straightforward: sitting in the second floor office of his suburban DC home, he scrutinizes the music publications and statistics, probing for bands that people want to see and that won’t charge too much to appear. He told the Post that he won’t book an act as a favor, and he won’t flatter a group into playing his club to keep them away from the competition by overpaying them. “I don’t subscribe,” he says, “to doing shows that will lose money.”
Hurwitz has been connected with music in one way or another for almost as long as he can remember. The Post relates some of his early memories:
He rigged a system to broadcast radio from his basement to his parents and brothers in the living room. “I used to bring my singles into class and play them,” Hurwitz said. When he was 16, he decided he wanted to be a deejay and got his chance when alternative rock station WHFS gave him a spot. “It was from 7:45 to 8—fifteen minutes,” he said, laughing. “But that was okay because I wanted to be on the radio, and I had my own show, as a high school student.” He said he was fired “for being too progressive.” Avis Thomas-Lester, “A Club Owner’s Mojo,” Washington Post, December 28, 2009, accessed May 11, 2011, http://views.washingtonpost.com/on-success/what-it-takes/2009/12/seth_hurwitz.html.
It’s a long way from getting fired for playing music too obscure for alternative radio to where Hurwitz is now: putting on concerts by bands selected because they’ll make money.
Exercise \(4\)
1. Hurwitz is brutally honest about the fact that he’ll only contract bands capable of turning a profit. When he was younger and a deejay, he insisted on playing the music he judged best no matter how many people turned off the radio when his show came on (an attitude that cost him the job).
• What, if anything, is Hurwitz the older concert promoter compromising to get ahead? Is there an ethical objection that could be raised here? If so, what? If not, why not?
• When Hurwitz was a deejay, he played records that led people to change the station. Then the station changed him. Is this an example of business regulating itself? Is there an ethical side to this, or is it just the way money works? Explain.
• From the information given, would you judge that Hurwitz is successful in business? Why or why not?
• Are all these questions part of institutional business ethics or personal business ethics? Explain.
2. Hurwitz says that he doesn’t book bands as favors. Presumably at least some of the favors he’s talking about would be to friends.
• Do people who run their own company have an ethical responsibility to separate friends from business?
3. One nice thing about Hurwitz working upstairs in his own house is that he can show up for work in the morning in his pajamas. Should all places of business be like that—with people free to wear whatever they want for work? Explain your answer from an ethical perspective.
4. Most of Hurwitz’s shows are on weeknights. Some concertgoers may have such a good time that they can’t make it in to work the next day.
• If you go to a concert on a Wednesday and are too hung over to make it to work on Thursday, what should you tell your boss on Friday? That you were hung over? That your car broke down? Something else? Justify.
• Should Hurwitz accept some responsibility and blame for absent employees? Explain. | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/01%3A_What_is_Business_Ethics/1.06%3A_Case_Studies.txt |
Chapter 2 examines some theories guiding ethical decisions in business. It considers ethics defined by duties and rights.
02: Theories of Duties and Rights- Traditional Tools for Making Decisions in Business When the Means Justify the Ends
Learning Objectives
1. Distinguish ethical theory centered on means from theory centered on ends.
A Foundational Question
In business ethics, do the means justify the ends, or do the ends justify the means? Is it better to have a set of rules telling you what you ought to do in any particular situation and then let the chips fall where they may, or should you worry more about how things are going to end up and do whatever’s necessary to reach that goal?
Until recently, Eddy Lepp ran an organic medicine business in Northern California. His herbal product soothed nausea and remedied vomiting, especially as suffered by chemo patients. He had a problem, though. While his business had been OK’d by California regulators, federal agencies hadn’t approved: on the national level, selling his drug was breaking the law. On the other hand, not selling his remedy had a significant downside: it was consigning his clients to debilitating suffering. So when federal agents came knocking on his door, he had to make a decision.
If the means justify the ends—if you should follow the rules no matter the consequences—then when the agents ask Lepp point blank whether he’s selling the medicine, the ethical action is to admit it. He should tell the truth even though that will mean the end of his business. On the other hand, if the ends justify the means—if your ethical interest focuses on the consequences of an act instead of what you actually do—then the ethics change. If there’s a law forcing people to suffer unnecessarily, it should be broken. And when the agents ask him whether he’s selling, he’s going to have an ethical reason to lie.
Across the entire field of traditional ethics, this is a foundational distinction. Is it what you do that matters, or the consequences? It’s hard to get oriented in ethics without making a preliminary decision between these two. No one can make the decision for you, but before anyone can make it, an understanding of how each works should be reached. This chapter will consider ethics as focusing on the specific act and not the consequences. Theories of duties and rights center discussion. Chapter 3 is about ethics as looking at the consequences instead of the act.
Key Takeaways
• When the means justify the ends, ethical consideration focuses on what you do, not the consequences of what you’ve done.
• Traditionally, focusing on means instead of ends leads to an ethics based on duties or rights.
Exercise \(1\)
1. Your mother is ill with diabetes, and you can’t afford her medicine. In the pharmacy one day, you notice the previous customer forgot that same prescription on the counter when she left. Why might the premise that the ends justify the means lead you to steal the pills?
2. Why might the premise that the means justify the ends lead you to return the pills? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/02%3A_Theories_of_Duties_and_Rights-_Traditional_Tools_for_Making_Decisions_in_Business_When_the_Means_Justify_the_Ends/2.01%3A_The_Means_Justify_the_Ends_versus.txt |
Learning Objectives
1. Define an ethical duty.
2. Distinguish specific duties.
3. Show how ethical duties work in business.
4. Consider advantages and drawbacks of an ethics based on duties.
Duties
“Should I steal that?”
“No, stealing’s wrong.”
Basic ethics. There are things that are right and others that are wrong, and the discussion ends. This level of clarity and solidity is the main strength of an ethics based on duties. We all have a duty not to steal, so we shouldn’t do it. More broadly, when we’re making moral decisions, the key to deciding well is understanding what our duties are and obeying them. An ethics based on duties is one where certain rules tell us what we ought to do, and it’s our responsibility to know and follow those rules.
The Madoff Family
If we’re supposed to obey our duties, then what exactly are they? That’s a question Andrew Madoff faced in December 2008 when he learned that some—maybe most, maybe all—of the money he and his family had been donating to the charitable Lymphoma Research Foundation and similar medical investigation enterprises was, in fact, stolen.
It was big money—in the millions—channeled to dedicated researchers hot on the trail of a remedy for lymphoma, a deadly cancer. Andrew, it should be noted, wasn’t only a cancer altruist; he was also a victim, and the charitable money started flowing to the researchers soon after he was diagnosed.
It’s unclear whether Andrew knew the money was stolen, but there’s no doubt that his dad did. Dad—Bernard “Bernie” Madoff—was the one who took it. The largest Ponzi scheme in history, they call it.
A Ponzi scheme—named after the famous perpetrator Charles Ponzi—makes suckers of investors by briefly delivering artificially high returns on their money. The idea is simple: You take \$100 from client A, promising to invest the money cleverly and get a massive profit. You spend \$50 on yourself, and at the end of the year, you send the other \$50 back to the client along with a note saying that the original \$100 investment is getting excellent results and another \$50 should come in next year and every year from then on. Happy client A recommends friends, who become clients B, C, and D. They bring in a total of \$300, so it’s easy to make good on the original promise to send a \$50 return the next year to client A. And you’ve now got \$250 remaining from these three new clients, \$150 of which you will soon return to them (\$50 for each of the three new clients), leaving you with \$100 to spend on yourself. The process repeats, and it’s not long before people are lining up to hand over their money. Everyone makes off like bandits.
Bandit is the right term for Madoff, who ran his Ponzi empire for around fifteen years. So many people handed over so much cash, and the paper trail of fake stock-purchase receipts and the rest grew so complicated that it’s impossible to determine exact numbers of victims and losses. Federal authorities have estimated the victims were around five thousand and the losses around \$65 billion, which works out to about \$13 million squeezed from each client.
Madoff had, obviously, rich clients. He met them at his home in New York City; at his mansion in hyperwealthy Palm Beach, Florida; or on his fifty-five-foot yacht cleverly named Bull. He impressed them with a calm demeanor and serious knowledge. While it’s true that he was mostly taking clients’ money and sticking it in his wallet, the investments he claimed to engineer were actually quite sophisticated; they had to do with buying stock in tandem with options to buy and sell that same stock on the futures market. He threw in technical words like “put” and “call” and left everyone thinking he was either crazy or a genius. Since he was apparently making money, “genius” seemed the more likely reality. People also found him trustworthy. He sat on the boards of several Wall Street professional organizations and was known on the charity circuit as a generous benefactor. Health research was a favorite, especially after Andrew’s cancer was diagnosed.
Exactly how much money Madoff channeled to Andrew and other family members isn’t clear. By late 2008, however, Andrew knew that his father’s investment company had hit a rough patch. The stock market was crashing, investors wanted their money back, and Madoff was having trouble rounding up the cash, which explains why Andrew was surprised when his father called him in and said he’d decided to distribute about \$200 million in bonuses to family members and employees.
It didn’t make sense. How could there be a cash-flow crisis but still enough cash to pay out giant bonuses? The blunt question—according to the Madoff family—broke Madoff down. He spilled the truth: there was little money left; it was all a giant lie.
The next day, Andrew reported the situation to the authorities.
Madoff sits in jail now. He’ll be there for the rest of his life. He claims his scheme was his project alone and his children had no knowledge or participation in it, despite the fact that they were high executives in his fraudulent company. Stubbornly, he has refused to cooperate with prosecutors interested in determining the extent to which the children may have been involved. His estate has been seized. His wife, though, was left with a small sum—\$2.5 million—to meet her day-to-day living expenses. Bilked investors got nearly nothing.
One of those investors, according to ABC News, was Sheryl Weinstein. She and her family are now looking for a place to live because after investing everything with Madoff and losing it, they were unable to make their house payments. At Madoff’s sentencing hearing, and with her husband seated beside her, she spoke passionately about their plight and called Madoff a “beast.” The hearing concluded with the judge calling Madoff “evil.” Brian Ross, Anna Schecter, and Kate McCarthy, “Bernie Madoff's Other Secret: His Hadassah CFO Mistress,” ABCNews.com, April 16, 2011, accessed May 11, 2011, http://abcnews.go.com/Blotter/Madoff/story?id=8319695&page=1.
Weinstein was well remembered by Madoff’s longtime secretary, Eleanor Squillari. Squillari reported that Weinstein would often call Madoff and that “he would roll his eyes and then they’d go meet at a hotel.” Their affair lasted twenty years, right up until the finance empire collapsed.
What Do I Owe Myself? Historically Accumulated Duties to the Self
Over centuries of thought and investigation by philosophers, clergy, politicians, entrepreneurs, parents, students—by just about everyone who cares about how we live together in a shared world—a limited number of duties have recurred persistently. Called perennial duties, these are basic obligations we have as human beings; they’re the fundamental rules telling us how we should act. If we embrace them, we can be confident that in difficult situations we’ll make morally respectable decisions.
Broadly, this group of perennial duties falls into two sorts:
1. Duties to ourselves
2. Duties to others
Duties to the self begin with our responsibility to develop our abilities and talents. The abilities we find within us, the idea is, aren’t just gifts; it’s not only a strike of luck that some of us are born with a knack for math, or an ear for music, or the ability to shepherd conflicts between people into agreements. All these skills are also responsibilities. When we receive them, they come with the duty to develop them, to not let them go to waste in front of the TV or on a pointless job.
Most of us have a feeling for this. It’s one thing if a vaguely clumsy girl in a ballet class decides to not sign up the next semester and instead use the time trying to boost her GPA, but if someone who’s really good—who’s strong, and elegant, and a natural—decides to just walk away, of course the coach and friends are going to encourage her to think about it again. She has something that so few have, it’s a shame to waste it; it’s a kind of betrayal of her own uniqueness. This is the spot where the ethics come in: the idea is that she really should continue her development; it’s a responsibility she has to herself because she really can develop.
What about Andrew Madoff, the cancer sufferer? He not only donated money to cancer research charities but also dedicated his time, serving as chairman of the Lymphoma Research Foundation (until his dad was arrested). This dedication does seem like a duty because of his unique situation: as a sufferer, he perfectly understood the misery caused by the disease, and as a wealthy person, he could muster a serious force against the suffering. When he did, he fulfilled the duty to exploit his particular abilities.
The other significant duty to oneself is nearly a corollary of the first: the duty to do ourselves no harm. At root, this means we have a responsibility to maintain ourselves healthily in the world. It doesn’t do any good to dedicate hours training the body to dance beautifully if the rest of the hours are dedicated to alcoholism and Xanax. Similarly, Andrew should not only fight cancer publicly by advocating for medical research but also fight privately by adhering to his treatment regime.
At the extreme, this duty also prohibits suicide, a possibility that no doubt crosses Bernie Madoff’s mind from time to time as he contemplates spending the rest of his life in a jail cell.
What Do I Owe Others? Historically Accumulated Duties to Others
The duties we have to ourselves are the most immediate, but the most commonly referenced duties are those we have to others.
Avoid wronging others is the guiding duty to those around us. It’s difficult, however, to know exactly what it means to wrong another in every particular case. It does seem clear that Madoff wronged his clients when he pocketed their money. The case of his wife is blurrier, though. She was allowed to keep more than \$2 million after her husband’s sentencing. She claims she has a right to it because she never knew what her husband was doing, and anyway, at least that much money came to her from other perfectly legal investment initiatives her husband undertook. So she can make a case that the money is hers to keep and she’s not wronging anyone by holding onto it. Still, it’s hard not to wonder about investors here, especially ones like Sheryl Weinstein, who lost everything, including their homes.
Honesty is the duty to tell the truth and not leave anything important out. On this front, obviously, Madoff wronged his investors by misleading them about what was happening with their money.
Respect others is the duty to treat others as equals in human terms. This doesn’t mean treating everyone the same way. When a four-year-old asks where babies come from, the stork is a fine answer. When adult investors asked Madoff where the profits came from, what they got was more or less a fairy tale. Now, the first case is an example of respect: it demonstrates an understanding of another’s capacity to comprehend the world and an attempt to provide an explanation matching that ability. The second is a lie; but more than that, it’s a sting of disrespect. When Madoff invented stories about where the money came from, he disdained his investors as beneath him, treating them as unworthy of the truth.
Beneficence is the duty to promote the welfare of others; it’s the Good Samaritan side of ethical duties. With respect to his own family members, Madoff certainly fulfilled this obligation: every one of them received constant and lavish amounts of cash. There’s also beneficence in Andrew’s work for charitable causes, even if there’s a self-serving element, too. By contrast, Madoff displayed little beneficence for his clients.
Gratitude is the duty to thank and remember those who help us. One of the curious parts of Madoff’s last chapter is that in the end, at the sentencing hearing, a parade of witnesses stood up to berate him. But even though Madoff had donated millions of dollars to charities over the years, not a single person or representative of a charitable organization stood up to say something on his behalf. That’s ingratitude, no doubt.
But there’s more here than ingratitude; there’s also an important point about all ethics guided by basic duties: the duties don’t exist alone. They’re all part of a single fabric, and sometimes they pull against each other. In this case, the duty Madoff’s beneficiaries probably felt to a man who’d given them so much was overwhelmed by the demand of another duty: the duty to respect others, specifically those who lost everything to Madoff. It’s difficult to imagine a way to treat people more disdainfully than to thank the criminal who stole their money for being so generous. Those who received charitable contributions from Madoff were tugged in one direction by gratitude to him and in another by respect for his many victims. All the receivers opted, finally, to respect the victims.
Fidelity is the duty to keep our promises and hold up our end of agreements. The Madoff case is littered with abuses on this front. On the professional side, there’s the financier who didn’t invest his clients’ money as he’d promised; on the personal side, there’s Madoff and Weinstein staining their wedding vows. From one end to the other in terms of fidelity, this is an ugly case.
Reparation is the duty to compensate others when we harm them. Madoff’s wife, Ruth, obviously didn’t feel much of this. She walked away with \$2.5 million.
The judge overseeing the case, on the other hand, filled in some of what Ruth lacked. To pay back bilked investors, the court seized her jewelry, her art, and her mink and sable coats. Those things, along with the couple’s three multimillion-dollar homes, the limousines, and the yacht, were all sold at public auction.
The Concept of Fairness
The final duty to be considered—fairness—requires more development than those already listed because of its complexity.
According to Aristotle, fairness is treating equals equally and unequals unequally. The treat equals equally part means, for a professional investor like Madoff, that all his clients get the same deal: those who invest equal amounts of money at about the same time should get an equal return. So even though Madoff was sleeping with one of his investors, this shouldn’t allow him to treat her account distinctly from the ones belonging to the rest. Impartiality must govern the operation.
The other side of fairness is the requirement to treat unequals unequally. Where there’s a meaningful difference between investors—which means a difference pertaining to the investment and not something extraneous like a romantic involvement—there should correspond a proportional difference in what investors receive. Under this clause, Madoff could find justification for allowing two distinct rates of return for his clients. Those that put up money at the beginning when everything seemed riskier could justifiably receive a higher payout than the one yielded to more recent participants. Similarly, in any company, if layoffs are necessary, it might make sense to say that those who’ve been working in the organization longest should be the last ones to lose their jobs. In either case, the important point is that fairness doesn’t mean everyone gets the same treatment; it means that rules for treating people must be applied equally. If a corporate executive decides on layoffs according to a last-in-first-out process, that’s fine, but it would be unfair to make exceptions.
One of the unique aspects of the idea of fairness as a duty is its hybrid status between duties to the self and duties to others. While it would seem strange to say that we have a duty of gratitude or fidelity to ourselves, it clearly makes sense to assert that we should be fair to ourselves. Impartiality—the rule of no exceptions—means no exceptions. So a stock investor who puts his own money into a general fund he runs should receive the same return as everyone else. A poor investment that loses 10 percent should cost him no more than 10 percent (he has to be fair to himself), and one that gains 10 percent shouldn’t net him any more than what the others receive (he has to be fair to others).
Modern Fairness: Rawls
The recent American philosopher John Rawls proposes a veil of ignorance as a way of testing for fairness, especially with respect to the distribution of wealth in general terms. For example, in society as Madoff knew it, vast inequalities of wealth weren’t only allowed, they were honored: being richer than anyone else was something to be proud of, and Madoff lived that reality full tilt. Now, if you asked Madoff whether we should allow some members of society to be much wealthier than others, he might say that’s fair: everyone is allowed to get rich in America, and that’s just what he did. However, the guy coming into Madoff’s office at 3 a.m. to mop up and empty the trash might see things differently. He may claim to work just as hard as Madoff, but without getting fancy cars or Palm Springs mansions. People making the big bucks, the suggestion could follow, should get hit with bigger taxes and the money used to provide educational programs allowing guys from the cleaning crew to get a better chance at climbing the income ladder. Now, given these two perspectives, is there a way to decide what’s really fair when it comes to wealth and taxes?
Rawls proposes that we try to reimagine society without knowing what our place in it would be. In the case of Madoff, he may like things as they are, but would he stick with the idea that everything’s fair if he were told that a rearrangement was coming and he was going to get stuck back into the business world at random? He might hesitate there, seeing that he could get dealt a bad hand and, yes, end up being the guy who cleans offices. And that guy who cleans offices might figure that if he got a break, then he’d be the rich one, and so he’s no longer so sure about raising taxes. The veil of ignorance is the idea that when you set up the rules, you don’t get to know beforehand where you’ll fall inside them, which is going to force you to construct things in a way that is really balanced and fair.
As a note here, nearly all children know the veil of ignorance perfectly. When two friends together buy a candy bar to split, they’ll frequently have one person break it, and the other choose a half. If you’re the breaker, you’re under the veil of ignorance since you don’t know which half you’re going to get. The result is you break it fairly, as close to the middle as you can.
Balancing the Duties
Duties include those to
• develop abilities and talents,
• do ourselves no harm,
• avoid wronging others,
• honesty,
• respect others,
• beneficence,
• gratitude,
• fidelity,
• reparation,
• fairness.
Taken on their own, each of these plugs into normal experience without significant problems. Real troubles come, though, when more than one duty seems applicable and they’re pulling in different directions.
Take Andrew Madoff, for example. Lying in bed at night and taking his ethical duties seriously, what should he do in the wake of the revelation that his family business was in essence a giant theft? On one side, there’s an argument that he should just keep on keeping on by maintaining his life as a New York financier. The route to justifying that decision starts with a duty to himself:
• Develop abilities and talents. As an expert in finance, someone with both knowledge of and experience in the field, Andrew should continue cultivating and perfecting his talents, at least those he had acquired on the legitimate side of the family’s dealings.
Beyond the duty to himself, Andrew can further buttress his decision to keep his current life going by referencing a duty to others:
• Beneficence. This may demand that Andrew continue along the lines he’d already established because they enabled his involvement with cancer research. He’s got money to donate to the cause and his very personal experience with the disease allows rare insight into what can be done to help sufferers. To the extent that’s true, beneficence supports Andrew’s decision to go on living as he had been.
On the other side, what’s the duty-based argument in favor of Andrew taking a different path by breaking away from his old lifestyle and dedicating all his energy and time to doing what he can for the jilted investors the family business left behind?
• Respect. The duty to treat others as equals demands that Andrew take seriously the abilities and lives of all those who lost everything. Why should they be reduced to powerlessness and poverty while he continues maximizing his potential as a stock buyer and nonprofit leader? Respecting others and their losses may mean leaving his profession and helping them get back on their feet.
• Reparation. This duty advances as the proposal for Andrew to liquidate his assets and divide the money as fairly as possible among the ruined investors. It may be that Andrew didn’t orchestrate the family Ponzi scheme, but wittingly or not, he participated and that opens the way to the duty to repayment.
So which path should Andrew follow? There’s no certain answer. What duties do allow Andrew—or anyone considering his situation—to achieve is a solid footing for making a reasonable and defendable decision. From there, the ethical task is to weigh the various duties and choose which ones pull harder and make the stronger demand.
Where Do Duties Come From?
The question about the origin of duties belongs to metaethics, to purified discussions about the theory of ethics as opposed to its application, so it falls outside this book’s focus. Still, two commonly cited sources of duties can be quickly noted.
One standard explanation is that duties are written into the nature of the universe; they’re part of the way things are. In a sense, they’re a moral complement to the laws of physics. We know that scientists form mathematical formulas to explain how far arrows will travel when shot at a certain speed; these formulas describe the way the natural world is. So too in the realm of ethics: duties are the rules describing how the world is in moral terms. On this account, ethics isn’t so different from science; it’s just that scientists explore physical reality and ethicists explore moral reality. In both cases, however, the reality is already there; we’re just trying to understand it.
Another possible source for the duties is humanity in the sense that part of what it means to be human is to have this particular sense of right and wrong. Under this logic, a computer-guided robot may beat humans in chess, but no machine will ever understand what a child does when mom asks, “Did you break the vase? Tell me the truth.” Maybe this moral spark children are taken to feel is written into their genetic code, or maybe it’s something ineffable, like a soul. Whichever, the reason it comes naturally is because it’s part of our nature.
What Are the Advantages and Drawbacks of an Ethics Based on Duties?
One of the principal advantages of working with an ethics of duties is simplicity: duties are fairly easy to understand and work with. We all use them every day. For many of us these duties are the first thing coming to mind when we hear the word ethics. Straightforward rules about honesty, gratitude, and keeping up our ends of agreements—these are the components of a common education in ethics, and most of us are well experienced in their use.
The problem, though, comes when the duties pull against each other: when one says yes and the other says no. Unfortunately, there’s no hard-and-fast rule for deciding which duties should take precedence over the others.
Key Takeaways
• Duties include responsibilities to oneself and to others.
• Duties do not exist in isolation but in a network, and they sometimes pull against each other.
Exercise \(1\)
1. Bermie Madoff was a very good—though obviously not a perfect—fraudster. He got away with a lot for a long time. How could the duty to develop one’s own abilities be mustered to support his decision to become a criminal?
2. In the Madoff case, what duties could be mustered to refute the conclusion that he did the right thing by engaging in fraud?
3. Madoff gave up most of his money and possessions and went to jail for his crimes. Is there anything else he should have done to satisfy the ethical duty of reparation?
4. In your own words, what does it mean to treat equals equally and unequals unequally? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/02%3A_Theories_of_Duties_and_Rights-_Traditional_Tools_for_Making_Decisions_in_Business_When_the_Means_Justify_the_Ends/2.02%3A_Perennial_Duties.txt |
Learning Objectives
1. Define Immanuel Kant’s categorical imperative.
2. Show how the categorical imperative functions in business.
3. Consider advantages and drawbacks of an ethics based on the categorical imperative.
Kant
German philosopher Immanuel Kant (1724–1804) accepted the basic proposition that a theory of duties—a set of rules telling us what we’re obligated to do in any particular situation—was the right approach to ethical problems. What he set out to add, though, was a stricter mechanism for the use of duties in our everyday experience. He wanted a way to get all these duties we’ve been talking about to work together, to produce a unified recommendation, instead of leaving us confused between loyalty to one principle and another. At least on some basic issues, Kant set out to produce ethical certainty.
Lying is about as primary as issues get in ethics, and the Madoff case is shot through with it:
• Bernie Madoff always claimed that the Ponzi scheme wasn’t the original idea. He sought money from investors planning to score big with complicated financial maneuvers. He took a few losses early on, though, and faced the possibility of everyone just taking their cash and going home. That’s when he started channeling money from new investors to older ones, claiming the funds were the fruit of his excellent stock dealing. He always intended, Madoff says, to get the money back, score some huge successes, and they’d let him get on the straight and narrow again. It never happened. But that doesn’t change the fact that Madoff thought it would. He was lying temporarily, and for the good of everyone in the long run.
• Sheryl Weinstein had a twenty-year affair with Madoff. She also invested her family’s life savings with him. When the Ponzi scheme came undone, she lost everything. To get some money back, she considered writing a tell-all, and that led to a heart-wrenching decision between money and her personal life. Her twenty-year dalliance was not widely known, and things could have remained that way: her husband and son could’ve gone on without the whole world knowing that the husband was a cuckold and the son the product of a poisoned family. But they needed money because they’d lost everything, including their home, in Madoff’s scam. So does she keep up the false story or does she turn the truth into a profit opportunity?
What does Kant say about all this? The answer is his categorical imperative. An imperative is something you need to do. A hypothetical imperative is something you need to do, but only in certain circumstances; for example, I have to eat, but only in those circumstances where I’m hungry. A categorical imperative, by contrast, is something you need to do all the time: there are ethical rules that don’t depend on the circumstances, and it’s the job of the categorical imperative to tell us what they are. Here, we will consider two distinct expressions of Kant’s categorical imperative, two ways that guidance is provided.
First Version of the Categorical Imperative
The first version or expression of the categorical imperative: Act in a way that the rule for your action could be universalized. When you’re thinking about doing something, this means you should imagine that everyone did it all the time. Now, can this make sense? Can it happen? Is there a world you can imagine where everyone does this thing that you’re considering at every opportunity? Take the case of Madoff asking himself, “Should I lie to keep investor money flowing in?” What we need to do is imagine this act as universalized: everyone lies all the time. Just imagine that. You ask someone whether it’s sunny outside. It is sunny, but they say, “No, it’s raining.” The next day you ask someone else. Again, it’s sunny, but they say, “No, it’s snowing.” This goes on day after day. Pretty soon, wouldn’t you just give up listening to what people say? Here’s the larger point: if everyone lies all the time, pretty soon people are going to stop listening to anyone. And if no one’s listening, is it possible to lie to them?
What Kant’s categorical imperative shows is that lying cannot be universalized. The act of lying can’t survive in a world where everyone’s just making stuff up all the time. Since no one will be taking anyone else seriously, you may try to sell a false story but no one will be buying.
Something similar happens in comic books. No one accuses authors and illustrators of lying when Batman kicks some bad guys into the next universe and then strips off his mask and his hair is perfect. That’s not a lie; it’s fiction. And fictional stories can’t lie because no one expects they’ll tell the truth. No one asks whether it’s real or fake, only whether it’s entertaining. The same would go in the real world if everyone lied all the time. Reality would be like a comic: it might be fun, or maybe not, but accusing someone of lying would definitely be absurd.
Bringing this back to Madoff, as Kant sees it he has to make a basic decision: should I lie to investors to keep my operation afloat? The answer is no. According to the categorical imperative, it must be no, not because lying is directly immoral, but because lying cannot be universalized and therefore it’s immoral.
The same goes for Sheryl Weinstein as she wonders whether she should keep the lid on her family-wrecking affair. The answer is no because the answer is always no when the question is whether I should lie. You might want to respond by insisting, “She’s already done the deed, and Bernie’s in jail so it’s not going to happen again. The best thing at this point would be for her to just keep her mouth shut and hold her family together as best she can.” That’s a fair argument. But for Kant it’s also a loser because the categorical imperative gives the last word. There’s no appeal. There’s no lying, no matter what.
One more point about the universalization of acts: even if you insist that a world could exist where everyone lied all the time, would you really want to live there? Most of us don’t mind lying so much as long as we’re the ones getting away with it. But if everyone’s doing it, that’s different. Most of us might agree that if we had a choice between living in a place where everyone told the truth and one where everyone lied, we’d go for the honest reality. It just makes sense: lying will help you only if you’re the sole liar, but if everyone’s busy taking advantage of everyone else, then there’s nothing in it for you, and you might just as well join everyone in telling the truth.
Conclusion. The first expression of the categorical imperative—act in such a way that the rule for your action could be universalized—is a consistency principle. Like the golden rule (treat others as you’d like to be treated), it forces you to ask how things would work if everyone else did what you’re considering doing.
Objections to the First Version of the Categorical Imperative
One of the objections to this ethical guidance is that a reality without lying can be awfully uncomfortable. If your boss shows up for work on a Friday wearing one of those designer dresses that looks great on a supermodel and ridiculous everyhere else, and she asks what you think, what are you going to say? “Hideous”? Telling the truth no matter what, whether we’re at work or anywhere else, is one of those things that sounds good in the abstract but is almost impossible to actually live by.
Then the problem gets worse. A deranged addict storms into your office announcing that he’s just received a message from the heavens. While chewing manically on dirty fingernails, he relates that he’s supposed to attack someone named Jones—anyone named Jones. “What,” he suddenly demands, “is your name?” Unfortunately, you happen to be named Sam Jones. Now what?
Second Version of the Categorical Imperative
The second expression of the categorical imperative is: Treat people as an end, and never as a means to an end. To treat people as ends, not means is to never use anyone to get something else. People can’t be tools or instruments, they can’t be things you employ to get to what you really want. A simple example of using another as a means would be striking up a friendship with Chris because you really want to meet his wife who happens to be a manager at the advertising company you desperately want to work for.
It’d be hard to imagine a clearer case of this principle being broken than that of Madoff’s Ponzi scheme. He used the money from each new investor to pay off the last one. That means every investor was nothing but a means to an end: every one was nothing more than a way to keep the old investors happy and attract new ones.
Madoff’s case of direct theft is clear cut, but others aren’t quite so easy. If Weinstein goes ahead and writes her tell-all about life in bed with Madoff, is she using him as a means to her end (which is making money)? Is she using book buyers? What about her husband and the suffering he would endure? It can be difficult to be sure in every case exactly what it means to “use” another person.
Another example comes from Madoff’s son, Andrew, who donated time and money to the cause of treating cancer. On one hand, this seems like a generous and beneficial treatment of others. It looks like he’s valuing them as worthwhile and good people who deserve to be saved from a disease. On the other hand, though, when you keep in mind that Andrew too had cancer, you wonder whether he’s just using other peoples’ suffering to promote research so that he can be saved.
Summarizing, where the first of the categorical imperative’s expressions was a consistency principle (treat others the way you want to be treated), this is a dignity principle: treat others with respect and as holding value in themselves. You will act ethically, according to Kant, as long as you never accept the temptation to treat others as a way to get something else.
Objections to the Second Version of the Categorical Imperative
The principal objection to this aspect of Kant’s theory is that, like the previous, it sounds good in the abstract, but when you think about how it would actually work, things become difficult. Almost all businesses require treating people as means and not as ends. In the grocery store, the cashier isn’t waiting there to receive your respectful attention. She’s there to run your items through the scanner and that’s it. The same goes for the guy in the produce section setting up the banana display. Really, just paying someone to do a job—no matter what the job might be—is treating them as a means to an end, as little more than a way to get the work done.
If that’s right, then you’re not going too far by wondering whether the entire modern world of jobs and money would unravel if we all suddenly became Kantians. Paying a janitor to clean up after hours, a paralegal to proofread a lawyer’s briefs, a day-care worker to keep peace among children at recess, all these treatments of others seem to fail Kant’s test.
Defenders of Kant understand all this perfectly and can respond. One argument is that providing someone with a job is not treating them as a means to your ends; instead, by allowing them the opportunity to earn a living, you’re actually supporting their projects and happiness. Seen this way, hiring people is not denigrating them, it’s enabling. And far from being immoral in the Kantian sense, it’s ethically recommendable.
Key Takeaways
• The first expression of Kant’s categorical imperative requires that ethical decisions be universalizable.
• The second expression of Kant’s categorical imperative requires that ethical decisions treat others as ends and not means.
• Kant’s conception of ethical duties can provide clear guidance but at the cost of inflexibility: it can be hard to make the categorical imperative work in everyday life.
Exercise \(1\)
1. Imagine Madoff lied to attain his clients’ money as he did, but instead of living the high life, he donated everything to charity. For Kant, does this remove the ethical stain from his name? Why not?
2. Think back to your first job, whatever it was. Did you feel like you were used by the organization, or did you feel like they were doing you a favor, giving you the job? How does the experience relate to the imperative to treat others as an end and not a means? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/02%3A_Theories_of_Duties_and_Rights-_Traditional_Tools_for_Making_Decisions_in_Business_When_the_Means_Justify_the_Ends/2.03%3A_Immanuel_Kant-_The_Duties_of_the_.txt |
Learning Objectives
1. Define an ethical right.
2. Distinguish specific rights.
3. Show how ethical rights work in business.
4. Consider advantages and drawbacks of an ethics based on rights.
Rights
An ethics based on rights is similar to an ethics based on duties. In both cases specific principles provide ethical guidance for your acts, and those principles are to be obeyed regardless of the consequences further down the line. Unlike duties, however, rights-based ethics concentrate their force in delineating your possibilities. The question isn’t so much What are you morally required to do; it’s more about defining exactly where and when you’re free to do whatever you want and then deciding where you need to stop and make room for other people to be free too. Stated slightly differently, duties tend to be ethics as what you can’t do, and rights tend to be about what you can do.
My Property, My Religion, My Nonprofit Organization, My Health Care, My Grass
Charles Edward “Eddy” Lepp is in jail now, in a prison not too far away from the site of the business that got him in trouble: Eddy’s Medicinal Gardens and Ministry. What was Eddy Lepp the gardener and minister up to on his twenty-acre property near a lake in California, about a hundred miles north from San Francisco? Here are the highlights:
• Ministry. Lepp claims—and there doesn’t seem to be anyone who disputes him—that he’s an authentic Rastafarian reverend.
• Rastafarianism. Developed over the last century in Africa and the Caribbean, the religion works within the basic structure of Christianity but contains important innovations. Haile Selassie I was the emperor of Ethiopia from 1930 to 1974 and, according to the faith, was also the reincarnation of Jesus Christ. Further, marijuana—called ganja by believers—accompanies religious meetings and ceremonies; it brings adherents closer to God.
• Lepp’s Medicinal Gardens. In fact, this wasn’t a garden so much as a collective farm. Lepp oversaw the work of volunteers—their numbers totaling about two hundred—and did some harvesting and planting himself. Many of the farm’s marijuana leaves were smoked by the 2,500 members of his zonked-out church as part of Rastafarian celebrations and meetings, and the rest was, according to Lepp, distributed to individuals with serious health problems.
• Marijuana and health care. Studies indicate that in some patients marijuana may alleviate nausea and vomiting, especially as connected with chemotherapy. There’s also a list of further symptoms and maladies the drug could relieve, according to some evidence. It should be noted here that many suspect the persons conducting these studies (not to mention the patients receiving the testing) are favorably predisposed toward marijuana in the first place, and the prejudice may contaminate conclusions. What’s certain is that from a strictly medical perspective, the question about marijuana’s utility remains controversial. Among those who are convinced, however, smoking is a good remedy. That’s why in California patients have been granted a legal right to possess and use marijuana medicinally, as long as they’ve got a doctor’s approval. Unfortunately for Lepp, California law can’t bar federal prosecutions, and it was the US Drug Enforcement Administration from all the way out in Washington, DC, that eventually came after him. Elizabeth Larson, “Lepp Sentenced to 10 Years in Federal Prison for Marijuana Case,” Lake County News, May 18, 2009, accessed May 11, 2011, lakeconews.com/content/view/8703/764/; Bob Egelko, “Medical Pot Grower Eddy Lepp Gets 10 Years,” Cannabis Culture Magazine, May 18, 2009, accessed May 11, 2011, http://www.cannabisculture.com/v2/content/medical-pot-grower-eddy-lepp-gets-10-years.
About retirement age now, Eddy Lepp is one of those guys who never really left Woodstock. Before being incarcerated, he slumped around in tie-dyes and jeans. He liked wearing a hat emblazoned with the marijuana leaf. Out on his semirural farm, he passed the days smoking joints and listening to Bob Marley music.
Everyone seems to like the guy. A longtime activist for the legalization of marijuana, he’s even something of a folk hero in Northern California. At his sentencing, the crowd (chanting “free Eddy!”) spilled out into the courthouse hallways. The judge didn’t seem to mind the spectacle, and she went out of her way to say she didn’t want to hit him with ten years of jail time, but federal guidelines gave her no choice. Now there’s talk of a pardon.
Like Bernie Madoff, Lepp was touched by cancer. Madoff’s son Andrew was stricken and so was Lepp’s wife. She died. Also, like Madoff, Lepp was a businessman. Madoff made millions and lived in luxury while robbing investors; Lepp made enough to scrape by from his ministry and farming enterprises.
What’s a Right?
One definition of a right in ethics is a justified claim against others. I have the right to launch a gardening business or a church enterprise or both on my property, and you’re not allowed to simply storm in and ruin things. You do have the right, however, to produce your own garden company and church on your property. On my side, I have the right to free speech, to say whatever I want no matter how outrageous and you can’t stop me. You can, however, say whatever you want, too; you can respond to my words with whatever comes into your head or just ignore me completely. A right, in sum, is something you may do if you wish, and others are morally obligated to permit your action.
Duties tend to be protective in nature; they’re about assuring that people aren’t mistreated. Rights are the flip side; they’re liberating in nature, they’re about assuring that you’re as free as possible.
Because rights theory maximizes choices in the name of ethics, it’s not surprising that Lepp built his court defense on that ground. Lepp fought the law by maintaining that his medical gardens business and church operations involved his land and his religion. It wasn’t that he had a right to grow pot or pray to a specific God; that had nothing to do with it. The point is he had a right to do whatever he wanted on that land, and believe in whatever he wanted in his mind. That’s what rights are about. As opposed to duties that fix on specific acts, rights ethics declares that there are places (like my land) where the acts don’t matter. As long as no one else’s rights are being infringed on, I’m free.
Finally, duties tend to be community oriented: they’re about how we get along with others. Rights tend to center on the individual and what he or she can do regardless of whether anyone else is around or not. That explains why a duty-based ethics coheres more easily with a scene like the one Madoff provoked, a situation that involves winners and losers, criminals and victims. On the other side, an ethics based on rights is more convenient for Lepp and his gardening and religious enterprises. Though he ended up in jail, there were no obvious victims of his crimes; at least no one complained that they’d been mistreated or victimized as individuals.
What Are the Characteristics of Rights?
English philosopher John Locke (1632–1704) maintained that rights are
• Universal. The fundamental rights don’t transform as you move from place to place or change with the years.
• Equal. They’re the same for all, men and women, young and old.
• Inalienable. They can’t be taken, they can’t be sold, and they can’t be given away. We can’t not have them. This leads to a curious paradox at the heart of rights theory. Freedom is a bedrock right, but we’re not free to sell ourselves into slavery. We can’t because freedom is the way we are; since freedom is part of my essence, it can’t go away without me disappearing too.
What Rights Do I Have?
The right to life is just what it sounds like: Lepp, you, and I should be able to go through our days without worrying about someone terminating our existence. This right is so deeply embedded in our culture that it almost seems unnecessary to state, but we don’t need to stretch too far away from our time and place to find scenes of the right’s trampling. Between the world wars, Ukraine struggled for independence from Joseph Stalin’s neighboring Russia. Stalin sealed the borders and sent troops to destroy all food in the country. Millions died from starvation. Less dramatically but more contemporaneously, the right to life has been cited as an argument against capital punishment.
The right to freedom guarantees individuals that they may do as they please, assuming their actions don’t encroach on the freedom of others. In a business environment, this assures entrepreneurs like Lepp and Madoff that they may mount whatever business operation they choose. Lepp’s garden and ministry were surely unorthodox, but that can’t be a reason for its prohibition.
Similarly, within a company, the right to freedom protects individuals against abuse. No boss can demand more from an employee than what that employee has freely agreed—frequently through a signed contract—to provide.
On the other side, however, there are questions about how deeply this basic right extends through day-to-day working life. For example, the freewheeling Lepp probably wasn’t too concerned about the clothes his volunteer workers chose to wear out in the garden, but what about clothes in Madoff’s investment house? He was serving wealthy, urban clients in suits and ties. What would their reaction be to a junior investment advisor just out of college who shows up for a meeting in a tie-dye and jeans? Some clients, it’s safe to say, would head for the exit. Now, what recourse does boss Madoff have when the casual employee says, “Look, it’s a free country; I can wear whatever I want”? Within a rights theory of ethics, it must be conceded that the employee is correct. It’s also true, however, that Madoff has rights too—specifically, the freedom to fire the guy. What can be taken from this is that, as a general rule, the enabling side of a rights ethics is that you can do whatever you want, but the limiting and controlling side is that the same goes for everyone else.
From the right to freedom, other rights seem to derive naturally. The right to free speech is tremendously important in the commercial world. Lepp’s messages to his Rasta flock may have provoked skepticism in some listeners, but no one doubts that he had a right to voice his ideas. The same goes for Madoff’s exuberant claims concerning his investing strategy. Crucially, the same also goes for those on the other side of Madoff’s claims; the same freedom Madoff enjoyed also allowed whistle-blowers to answer back that it’s impossible to legitimately realize such constant and high profits. In fact, in the case of Madoff’s investment company, whistle-blowers did say that, repeatedly. No one listened, though. The right of free speech doesn’t guarantee a hearing.
The right to religious expression also follows from basic freedom. It guaranteed Lepp the space he needed to pioneer his particular brand of gardening Rastafarianism in Northern California. His is, obviously, a weird case, but the right works in more traditional workplaces, too. USA Today Emily Bazar, “Prayer Leads to Work Disputes,” USA Today, October 16, 2008, accessed May 11, 2011, www.usatoday.com/news/nation/2008-10-15-Muslim_N.htm. reported a case where Muslim workers were fired from their jobs in several meatpacking plants in the Midwest because they left the production line in the middle of the day without authorization to go outside and pray. The workers’ response? They filed a lawsuit claiming their right to religious expression had been violated.
No doubt it had been.
But the company’s response is also weighty. According to the article, “The problem with the Muslim prayer request is that it’s not one day or annual, it’s every day and multiple times. Further, those times shift over the course of the year based on the sun’s position.”
The result, according to the company, is that scheduling becomes very difficult, and those who aren’t Muslim find it nearly impossible to keep working when they’re getting abandoned so frequently during the day. Here we’re confronted with a very basic conflict of rights. While no one doubts that freedom exists to practice a religion, isn’t it also true that the company—or the company owners if we want to cast this in personal terms—have a right to set up a business in whatever manner they choose, with breaks scheduled for certain times and worker responsibilities strictly defined? In the end, the question about Muslim workers leaving the work floor to pray isn’t about one kind of religion or another; it’s not Christians against Muslims or something similar. The question is about which right takes precedence: the owners’ right to set up and run a company as they wish or the employees’ right to express their beliefs how and when they choose.
From an ethical perspective—which doesn’t necessarily correlate with a legal one—the resolution to this dilemma and any clash about conflicting rights runs through the question of whether there’s a way to protect the basic rights of both groups. It runs that way because rights are fundamentally about that, about maximizing freedom. In this case, it seems that firing the workers does achieve that goal. The owners’ initiative inside their company is protected, and the workers are now able to pray when they desire.
To be sure, other ethical approaches will yield different outcomes, but in the midst of rights theory where individual liberty is the guiding rule and the maximization of freedom is the overriding goal, it’s difficult for other concerns to get traction. So it may be that the community as a whole is better served by looking for a solution that allows Muslims to maintain their prayer schedule while also allowing the plant to continue functioning in a normal way. Even if that’s true, however, it’s not going to affect a rights-theory resolution very much because this kind of ethics privileges what you and I can do over what we can do together. It’s an ethics of individualism.
The right to pursue happiness sits beside the right to life and the right to freedom at the foundation of rights ethics. The pursuit gives final direction and meaning to the broad theory. Here’s how: it doesn’t do much good to be alive if you’re not free, so freedom orients the right to life. It also doesn’t do much good to be free if you can’t pursue happiness, so the right to pursue happiness orients freedom. That’s the organizing reasoning of ethical rights; it’s how the theory holds together. This reasoning leaves behind, however, the difficult question as to exactly where the pursuit of happiness leads.
In an economic context, one way of concretizing the pursuit of happiness is quite important: it’s our right to possessions and the fruits of our work. What’s ours, along with what we make or earn, we have a right to keep and use as we wish. Among rights theorists, this particular right attracts a staunch group of advocates. Called libertarians, they understand liberty as especially reflected in the right to dominion over what’s ours.
Libertarianism is arguably the most muscular area of rights theory, and it’s the one where most conflicts—and most stands in the name of personal rights and the pursuit of happiness—take place. This is definitely where Lepp made his stand. A frequently viewed YouTube video reveals exactly what standing up for libertarian rights looks like. In the clip, police have been called to Lepp’s Medicinal Gardens. The squad car pulls up the long dirt road, and Lepp goes out to stop it. This is their conversation:
Lepp: I am demanding that if you do not have a warrant that you leave. You are illegally on my property and I am demanding that you leave!
Police officer: (Into his radio) Can I get some help up here?
Lepp: This is private property. This is a church function. Again, I am asking, if you do not—
Police officer: You can ask all you want, Mr. Lepp, but I’m not leaving.
Lepp: Please leave my property! Under what authority are you standing here? Sir, I am demanding that you tell me under what authority are you violating my rights!
Police officer: Under no authority, Mr. Lepp. As soon as my sergeant gets here, he’ll advise you of whatever he wants to advise you of.
Lepp: Fine, then I suggest you go down and wait for him at the bottom of my property!
The officer stands there silently.
Video Clip
Eddy Lepp Makes a Stand
(click to see video)
This is the kind of scene that makes libertarians’ blood boil. Lepp, decked out in a t-shirt emblazoned with a marijuana leaf, actually stays fairly mellow, but he makes his point. He makes two points actually, and they need to be distinguished. The first is a legal point, it’s the question about whether the officer has a warrant. The officer doesn’t, but the second point—“under what authority are you violating my rights”—goes beyond the legal and into the ethical. Lepp believes the land is his and he’s not infringing on anyone else’s freedoms, and therefore, he can do what he wants and the police should leave him alone.
The officer isn’t quite sure how to reply to this, which is understandable. It is because this case displays a clear separation between the law on one side and an ethical reality on the other. Moreover, the two appear not only separate but also incompatible; it’s difficult to see any way to bring them together. With respect to the law, the case is clear: Lepp was growing massive amounts of marijuana on his farm and growing it for distribution. Federal law explicitly prohibits both the growing and the distributing. It’s unambiguous. It’s also clear that Lepp was doing it since you could see the crop from the public highway passing by his fields. Everyone saw that marijuana was growing, that people were harvesting it, and that they were planting more. As far as the law goes, Lepp really had no leg to stand on. Once the DEA found out about him, they didn’t have any choice but to bring him in. But ethically—and in terms of rights theory—there seems to be equal clarity going in the other direction. There were few complaints about Lepp’s activities. No one was hurt, and it was his land. It’s hard to see within a libertarian perspective any way to justify the police harassment, the legal proceedings, or the jail term Lepp ended up getting. This doesn’t mean Lepp was treated unjustly; it only means that whatever justice was served on him, it wasn’t libertarian.
Libertarianism in the Economic World
Lepp wasn’t a big-time businessman. His medicinal garden enterprise produced enough income to get him through the day and little more. When he went to court, he needed a public assistance attorney (not that it would’ve made any difference). But the issues he brings forward reverberate through the business world. Here are a few hypothetical scenarios where libertarian ethics comes into play:
• A massive brewery is constructed upstream from farmland and soaks up most of the water to make beer, leaving the downstream farms with almost nothing for irrigation. It’s the brewery’s land, so can’t the owners do what they want with the water running through it?
A strong libertarian argument offers a reason to say yes. Even though it’s true that others will be severely harmed by the act, an ethics that begins with the freedom to have what’s mine doesn’t buckle before the demands of others. Now, compare this outcome with the guidance offered by Kant’s categorical imperative, the idea that any act must be universalized. Within this framework the opposite conclusion is reached because if everyone just dammed up the water channeling through his or her land, then the brewer wouldn’t even have the choice: no water would be flowing across the land in the first place. So a duty-oriented ethics leads toward a solution that is more favorable for the larger community, where a rights-based perspective leaves more room for individuality but at the cost of the interests of others.
• Bernie Madoff didn’t start off rich. His father was a plumber in Queens. Even before launching his Ponzi scheme, he became wealthy by working hard, being smart, and investing wisely. He grew an investment house from scratch to being among the most prominent in New York. His annual income hit the millions even without the Ponzi stuff. Possibly, there was an administrative assistant of some kind there with him from the beginning. She was hired at, say, \$32,000 annually. Years later, Madoff is rich, and she’s at \$36,000. She still arrives at work in her beater car while Madoff gets the limousine treatment. Is this fair?
A strong libertarian position gives Madoff a reason to say yes. The wealth did accumulate from his efforts, not hers. If Madoff hadn’t been there the money wouldn’t have come in, but, if she’d quit on the first day, he would’ve hired someone else and the end result probably wouldn’t have been much different. The money, in other words, grew because of Madoff’s efforts, therefore it’s his, and therefore there’s no ethical obligation to spread it around.
On the other hand, a duty-based orientation would generate concerns about gratitude and respect. These perennial duties leave room for wealth redistribution. The argument is that Madoff owes the assistant a higher wage not because of her work performance but as a show of gratitude for her contribution over the years. Similarly, the duty of respect for others doesn’t demand that everyone be treated equally. It doesn’t mean everyone should get the same wage, but it does demand that people be respected as equals. This implies taking into account that the assistant’s efforts were prolonged and significant, just like Madoff’s, and therefore she should receive a salary more commensurate with his.
Negative and Positive Rights
The ethics of rights can be categorized as negative rights and positive rights. Negative rights are fundamental. They require others to not interfere with me and whatever I’m doing. The right to life is the requirement that others not harm me, the right to freedom is the requirement that others not interfere with me, the right to speech requires that others not silence me, the right to my possessions and the fruits of my labors requires that others let me keep and use what’s mine.
Positive rights, by contrast, are closer to traditional duties. They’re obligations others have to help protect and preserve my basic, negative rights. For example, the right to life doesn’t only require (negatively) that people not harm me, but it also requires (positively) that they come to my aid in life-threatening situations. If I’m in a car wreck, my right to life requires bystanders to call an ambulance. So if an individual with a rights-based philosophy and an individual with a duty-based philosophy both arrive on a crash scene, they’ll do the same thing—just for different reasons. The rights person calls for help to protect the victim’s right to life; the duties person calls to fulfill the duty to beneficence, the duty to look out for the welfare of others.
Positive rights can be drawn out to great lengths. For example, the argument is sometimes made that my basic right to freedom is worthless if I don’t have my health and basic abilities to operate in the world. This may lead a rights theorist to claim that society owes its members health care, education, housing, and even money in the case of unemployment. Typically, these positive rights are called welfare rights. Welfare, in this context, doesn’t mean government handouts but minimal social conditions that allow the members to fully use their intrinsic liberty and pursue happiness with some reasonable hope for success.
The hard question accompanying positive rights is: where’s the line? At what point does my responsibility to promote the rights of others impinge on my own freedom, my own pursuit of happiness, and my own life projects?
Rights in Conflict
The deepest internal problems with rights ethics arise when rights conflict. Abortion is a quick, hot-button example. On one side (pro-life), support comes from the initial principle: a human being, born or not, has a right to life, which may not be breached. On the other side (pro-choice), every person’s original freedom over themselves and their bodies ends all discussion. Now, one of the reasons this debate is so intractable is that both sides find equally strong support within the same basic ethical framework. There’s no way to decide without infringing on one right or the other.
A complementary case arose around Lepp’s Rasta religious gatherings. Though many of his neighbors didn’t care, there were a few who objected to having what were essentially mini-Woodstocks on the land next door. It was impossible, of course, for Lepp to entirely contain the noise, the smoke from fires, the traffic congestion, and the rest entirely on his property. The question is, when does my right to do what I want on my land need to be curtailed so that your right to dominion over yours isn’t soiled?
Broadening further, there’s the question about Lepp growing marijuana for medicinal purposes. On one side, a rights theory supports his inclination to grow what he wants on his land and sell the fruits of his labors to other adults for their consenting use. His is a farming business like any other. But on the other side, a theory of rights can extend into the realm of positive requirements. The right to the pursuit of happiness implies a right to health, and this may require government oversight of medical products so that society as a whole may be protected from fraudulent claims or harmful substances. The question of marijuana shoots up right here. What happens when socially sanctioned entities like the US Food and Drug Administration decide that marijuana is harmful and should therefore be prohibited? Which rights trump the others, the negative right to freedom or the positive right to oversee medical substances?
A similar question comes up between Madoff and his investors. A pure libertarian may say that individuals have the unfettered right to do as they choose, so if Bernie Madoff lies about investing strategies and his clients go along with it, well, that’s their problem. As long as they weren’t forced, they’re free to do whatever they wish with their money, even if that means turning it over to a charlatan. Again here, however, a broader view of rights theory answers that in the complex world of finance and investment, the right to the pursuit of happiness is also a right to some governmental oversight designed to make sure that everyone involved in the financial industry is playing by a single set of rules, ones prohibiting Ponzi schemes and similar frauds.
Examples multiply easily. I have the right to free speech, but if I falsely yell “fire!” in a crowded theater and set off a life-threatening stampede, what’s happening to everyone else’s negative right to life and positive right to health? Leaving the specifics aside, the conclusion is that, in general, problems with rights theory occur in one of two places:
1. I have negative rights to life, freedom, and my possessions but they infringe on your rights to the same.
2. I have a right to freedom and to do what I want but that right clashes with larger, society-level protections put into place to assure everyone a reasonable shot at pursuing their happiness.
What Justifies a Right?
One justification for an ethics of rights is comparable with the earlier-noted idea about duties being part of the logic of the universe. Both duties and rights exist because that’s the way things are in the moral world. Just like the laws of physics tell us how far a ball will fly when thrown at a certain speed, so too the rules of rights tell us what ought to happen and not happen in ethical reality. The English philosopher John Locke subscribed to this view when he called our rights “natural.” He meant that they’re part of who we are and what we do and just by living we incarnate them.
Another justification for an ethics of rights is to derive them from the idea of duties. Kant reappears here, especially his imperative to treat others as ends and not as means to ends. If we are ends in ourselves, if we possess basic dignity, then that dignity must be reflected somehow: it must have some content, some meaning, and the case can be made that the content is our possession of certain autonomous rights.
Advantages and Drawbacks of an Ethics Based on Rights
Because of its emphasis on individual liberties, rights theory is very attractive to open-roaders and individualists. One of the central advantages of a rights ethics is that it clears a broad space for you and me and everyone else to be ourselves or make ourselves in any way we choose. On the other side of that strength, however, there’s a disadvantage: centering ethics on the individual leaves little space of agreement about how we can live together. An ethics of rights doesn’t do a lot to help us resolve our differences, it does little to promote tolerance, and it offers few guarantees that if I do something beneficial for you now, you’ll do something beneficial for me later on.
Another strong advantage associated with an ethics of rights is simplicity in the sense that basic rights are fairly easy to understand and apply. The problem, however, with these blunt and comprehensible rights comes when two or more of them conflict. In those circumstances it’s hard to know which rights trump the others. In the case of Lepp’s business—the Medicinal Gardens—it’s hard to be sure when his use of his land infringed on the rights of neighbors to enjoy their land, and it’s difficult to know when the health product he offered—marijuana—should be prohibited in the name of the larger right to health for all individuals in a society. Most generally, it’s difficult to adjudicate between claims of freedom: where does mine stop and yours begin?
Key Takeaways
• Rights are universal and inalienable.
• Basic rights include those to life, freedom, and the pursuit of happiness.
• Rights theory divides negative from positive rights.
• Ethical rights provide for individual freedom but allow few guidelines for individuals living and working together in a business or in society
Exercise \(1\)
1. How does the right to pursue happiness license Lepp’s Medicinal Gardens?
2. What is a libertarian argument against imprisoning Lepp?
3. One justification Lepp cited for his farm was the health benefits marijuana could provide. Assuming Lepp was right about those benefits, how could they be combined with a rights-based ethics to justify his activities?
4. How could the rights to freedom and the pursuit of happiness be set against Lepp’s business?
5. What are positive rights and how could they be mustered against Lepp’s farm?
6. If someone drives away from Lepp’s farm high as a kite and soon after drives off the road and into a tree, does Lepp bear any ethical responsibility for this within a rights ethics? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/02%3A_Theories_of_Duties_and_Rights-_Traditional_Tools_for_Making_Decisions_in_Business_When_the_Means_Justify_the_Ends/2.04%3A_Rights.txt |
Skin and Money
Source: Leslie Adams, www.ugo.com/the-goods/calculator-tattoo.
In the mid-1980s in Los Angeles, Somen “Steve” Banerjee and his friend Nick DeNoia pooled money to start a new kind of strip club: men baring it for women. Since they had no idea what they were doing, it didn’t go well. What finally helped was a couple of showmen from Las Vegas. Steve Merrit and his partner (professional and romantic) Mark Donnelly came aboard and hatched the idea of a Vegas-type song-and-dance show wrapped around the disrobing.
To find performers, they cruised the muscle beaches outside LA. They brought the guys back to a studio, applied some Village People–style outfits (policeman, fireman, construction worker, and so on), and ran the group through a line-dancing routine.
Their idea was simple but innovative: sex sells; but instead of making the show lustful, they made it entertaining. Drawing on their Las Vegas experience, Merrit and Donnelly understood how to do it, how to produce a fun theatrical fantasy instead of a crude flesh show. The general concept made sense and the execution was professional, but on opening night, no one knew what would happen.
Chippendales exploded. Women went crazy for the performances, first in the United States, then Europe, and then everywhere as Banerjee and DeNoia rushed to form multiple traveling versions of their production. The time they didn’t spend together mounting the shows they spent in court fighting over who was entitled to how much of the profits and who really owned the suddenly very valuable Chippendales name and concept. The dispute ended in 1987 after DeNoia was shot dead in his office.
One major problem Chippendales faced is that it wasn’t a hard show to copy. Get some muscled guys, some uniform-store costumes, a pop music soundtrack, and pound it all together into a dance routine with a little teasing; you don’t need a genius to do it. So others started.
Michael Fullington was a junior choreographer for Chippendales. He struck up a friendship with some of the showguys, and they split away into a group called Club Adonis. The original choreographers—Merrit and Donnelly—also got in on the act, forming their own traveling revue called Night Dreams.
Unhappy with these copycat acts, Banerjee hired a hit man to go around killing the whole bunch. The hit man, it turned out, was an FBI informant. Banerjee ended up in jail. The ensuing investigation led to more charges. There was arson (he’d burned down one of his own clubs for the insurance money some time back) and also another count of conspiracy to murder since it was Banerjee who’d arranged to have his original partner shot.
The case never got to trial. Banerjee agreed to plead guilty, absorb a twenty-six-year sentence, and give up his rights to Chippendales along with nearly all his money and real estate holdings.
While the lawyers worked out the details, Banerjee’s wife Irene worked feverishly to organize a group of character witnesses. By bringing a parade of people to testify about her husband’s good side at the sentencing hearing, she was hoping to get the jail time reduced a little bit. Or maybe she was hoping to hold on to more of the money and real estate they’d accumulated.
No one got the chance to testify. On the morning of the hearing, Banerjee hung himself in his cell.
Because the trial was never completed, the plea deal never went into effect. And because the guilty man was dead, there was no one left to charge with any crime. Chippendales and all the money and property associated with it went to Banerjee’s wife Irene.
Exercise \(1\)
1. Is being a Chippendale’s dancer honorable work?
• How could the perennial ethical duties to the self—develop our abilities and talents and do ourselves no harm—be mustered to support the idea that these men should be proud of what they do?
• Ethically, how does this job compare with working for the Metropolitan Opera in New York, an outfit that calls itself “a vibrant home for the world’s most creative and talented artists working in opera”?
2. Is hiring and training a Chippendale’s dancer honorable? Imagine you were one of the original choreographers cruising California beaches in search of beefcake and dance talent. You bring the guys in, choreograph their routine, and send them up on stage.
• Thinking just of the perennial duties to the self, is hiring and training them honorable? Under what conditions?
• Thinking just of the perennial duties to others—avoiding wrongful actions toward others, honesty, respect, beneficence (promoting the welfare of others), gratitude, fidelity (keeping promises, honor agreements), and reparation (compensating others when we harm them)—is hiring and training them honorable? Why or why not?
3. With respect to the ethics of duties, is Chippendales a respectable company in terms of how it treats its clients? How does this company compare with the Metropolitan Opera’s treatment of its clients (note that the Met occasionally replaces the word clients with the more flattering patrons)?
4. Leaving aside the legal issues and using only the perennial duties, what ethical case could be made in favor of Banerjee getting a hit man to eliminate the people who were copying his show?
• Should he have hired someone or done the job himself? Explain.
• What’s the difference between hiring a hit man and hiring a beefcake dancer?
• How would Kant respond to these questions?
5. The Club Adonis group worked for Chippendales before splitting to do the same thing elsewhere. Use Kant’s categorical imperative to show that their action was wrong.
6. According to the perennial duties, did Banerjee do the right thing hanging himself in the end?
7. According to Kant, did Banerjee do the right thing hanging himself?
8. When Banerjee hung himself, he lost his life, but he did manage to preserves his life’s property and wealth for his wife. Can a libertarian ethics be used to show that Banerjee did the right thing?
Two at the Same Time
Source: Photo courtesy of Robert Fairchild, http://www.flickr.com/photos/coffeego/3545289824.
On a real estate discussion board,“Ethical dilemma with submitting two offers at once? (contingency, clause, agent),” City-Data, accessed May 11, 2011, http://www.city-data.com/forum/real-estate/710433-ethical-dilemma-submitting-two-offers-once.html. someone with the sign-in name BriGuy23 asks, “Does anyone on here find any issue with submitting two offers to buy two different apartments at the same time? My friend thinks that it’s unfair due to the fact that one of the offers is definitely going to not go through which means they’re tying up the seller’s time (and money in a way). From a seller’s standpoint I think I would be annoyed but I really don’t see anything wrong with it from a buyer’s perspective. Thoughts?”
A response comes from middle-aged mom: “Sellers can negotiate multiple offers so there is no reason why a buyer could not make multiple offers on different places. Assuming you are represented by a buyer’s agent, I would use the same agent to make both offers. Make certain that your contract gives you an out in the unlikely event both are accepted.”
Exercise \(2\)
1. What does BriGuy23 suspect might be unethical about submitting two offers to buy two different apartments at the same time? Can you wrap this suspicion in the language of the duties?
2. Is middle-aged mom appealing to the concept of fairness to justify making multiple offers at the same time? If she is, then how? If she isn’t, what is her reasoning?
3. If Kant decided to make a contribution to this discussion board, what do you think he would write?
4. Middle-aged mom writes, “Make certain that your contract gives you an out in the unlikely event both are accepted.” She means that when you make an offer to buy, you actually offer a signed contract to buy the apartment, but there’s a catch, an escape clause that lets you pull out if you choose. Is that ethical, offering a signed contract offering to buy a property that includes an “out”?
5. You need a date for Saturday night.
• Would you have any problem with inviting two different people at the same time (by, say, leaving a message on both their phones)? Why or why not?
• Would you leave yourself an out in case both answers were yes? If not, why not? If so, what would it be and how could it be justified ethically?
Working at American Apparel
Photo courtesy of Natalia Rivera, http://www.flickr.com/photos/96952704@N00/317531326/.
Dov Charney is an American immigrant success story, but he’s not exactly a “Give me your tired, your poor” kind of immigrant. He’s a Canadian who came to America to attend an expensive private university.
He ended up founding American Apparel (AA), a clothing manufacturer producing trendy t-shirts and basics selling mainly to a young, edgy crowd.
Based in Los Angeles, their factory is among the biggest clothes-making operations in the nation. It employs almost five thousand workers. Those workers are well known for a number of reasons:
• Just having workers sets AA apart. Nearly all US clothing manufacturers outsource their cutting and sewing to poor countries. From Mexico to China, you can find factories paying locals fifty cents an hour to do the same kind of work they do at AA. The difference is the sewers working in Los Angeles typically get around fifteen dollars an hour. That’s not a lot in Southern California, but it’s enough to make them—according to AA—the best paid garment workers in the world.
• The workers don’t report to bosses so much as each other. They organize as independent teams paid a base wage of eight dollars an hour. On top of that they receive a bonus depending on how much they produce. So they get together, set their own targets, and go for them. This liberating of the workforce led to nearly a tripling of output and was matched by about a doubling of wages.
• The company features a generous stock options program to help workers buy shares in the enterprise.
• On its own initiative, the company provides basic health-care services through a clinic tucked into a factory corner. It provides bikes to employees, helping them zip through the downtown traffic morass without adding pollution to the infamous city smog. There are free telephones in the factory for employees to use to call family members at home.
• Many of those employees’ family members are in other countries; AA has a very large immigrant workforce.
• Many of those immigrants are in the country illegally, which partially explains why the company has been on the forefront of amnesty campaigns, organizing public rallies and media events of all kinds for the undocumented. Called Legalize LA, the campaign’s title references the fact that a tremendous number of Southern Californians outside AA are also illegal immigrants.
• In 2009, the federal government indicated to AA that 1,800 of its workers were using Social Security numbers and other identifying documents that had been purchased, stolen, or just plain invented. In any case, they didn’t match up. The company was forced to fire the employees.
Exercise \(3\)
1. Workers at Charney’s America Apparel are the highest-paid mass-production sewers in the world.
• In terms of Charney’s duties to the self, what ethical case can be made in favor of this high pay?
• In terms of Charney’s duties to others, what ethical case can be made in favor of this high pay?
• Are these wages fair? Why or why not?
2. In terms of duties—either the perennial duties or Kant’s categorical imperative—which is more recommendable: keeping the AA plant where and how it is, or moving it to Mexico and cutting the workers’ wages in half? Why is the decision you’ve made the better of the two?
A few factors to consider:
• In Mexico, the workers’ real pay in terms of local buying power would be much higher, even though the actual amount is less than what they receive here.
• Many of the workers are illegal immigrants from Mexico; their legal situation would obviously be remedied and proximity to family would increase.
• The national Mexican economy would benefit more from AA’s presence than does the US economy.
3. Kant’s categorical imperative requires that others be treated as ends and never as means.
• In what way could the argument be made that the employees at AA are being treated as means, and therefore Charney’s plant is unethical no matter how high his salaries may be?
• Besides high pay, the company provides workers with considerable freedom to set their own work pace and schedule. The company also provides a stock purchase program. Do either or both of these factors alleviate the charge that the workers are treated as means and not ends? Why or why not?
4. Eighteen hundred of AA’s five thousand workers were using false papers and Social Security numbers to get their job. Charney knew all about that but chose to overlook it.
• Leaving the law aside, how can that overlooking be justified ethically?
• Leaving the law aside, how can Kant be used to cast that action as ethically wrong in terms of lying? In terms of stealing? In terms of using people as means instead of ends?
• Charney and AA support illegal immigrants in two ways: by giving them jobs and by organizing popular protests in favor of their legalization. Ethically, are these two activities recommendable or not? Or is one recommendable and the other not?
5. Assuming it’s wrong for illegal immigrants to be working in America, who deserves the sterner ethical reprobation, Charney or the illegal workers? Explain in ethical terms.
6. The basic and natural rights of mainstream rights theory include the following:
• Life
• Freedom
• Free speech
• Religious expression
• The pursuit of happiness
• Possessions and the fruits of our work
• How can these rights be mustered to support Charney’s hiring and keeping workers he knows are in the country illegally?
• How can these rights be mustered to ethically denounce Charney for hiring and keeping workers he knows are in the country illegally?
• Thinking about those workers, do these rights give them an ethical license to use false Social Security numbers and identifying documents? Why or why not?
7. Eddy Lepp ended up in jail for his medicinal marijuana garden, yet Charney sleeps in a million-dollar beach house. Is this fair?
Pirates
Source: Photo courtesy of Marco Gomes, http://www.flickr.com/photos/marcogomes/1346283989.
The following is from an online discussion: “My cd-burner wont let me copy the cd..why...,” Hardforum, accessed May 11, 2011, http://www.hardforum.com/archive/index.php/t-711331.html.
overstand: I’ve been having problems with copying cds and trying to burn them…when the copy process gets to 4% the used read buffer will go down to zero and continue fluctuating…will someone let me know the procedures on fixing this.
retardedchicken: May I ask what CDs are you copying? Usually big companies put copy protection on their CDs so people dont ILLEGALLY copy their CDs.
-=iNsAnE=-: why do people post worthless crap like this? its none of your business what cd’s he’s copying…dont accuse him of making illegal copy’s of cd’s…maybe try posting somethign useful next time
Flipside: It’s not worthless crap mongloid.…Copyright protection does prevent the copying of some disks especially in main-stream programs such as Nero. Try using Clone CD—you may have better luck with a pure duplication program (No fuss).
Exercise \(4\)
1. The unanswered question here is whether the CD being copied is copyright protected, in other words, whether this is a piracy case. Assume it is. If retardedchicken had to fill out an ethical argument against CD piracy that relied on either the perennial duties or Kant, what could he say?
2. While overstand may be pirating, no one doubts that the original disc is legitimately his. Maybe he bought it or maybe someone gave it to him; either way, what’s the libertarian argument against retardedchicken? How could a libertarian justify overstand’s copying?
3. Would a libertarian believe that the company producing the disc has a right to lace it with code that makes duplication impossible? Explain.
4. It sounds like Clone CD is specifically made to help pirates get around the copyright protections manufacturers put on their discs.
• What’s the Kantian case for condemning Clone CD for their project?
• What’s the libertarian case for congratulating them?
Which of the two cases is stronger? Why?
5. Retardedchicken implies that overstand is a thief and -=iNsAnE=- calls retardedchicken’s post “worthless crap.” Flipside calls -=iNsAnE=- a “mongloid.”
• Is there an ethical case that can be made against the tone of this discussion?
• Does online interaction foster this tone? If so, can an ethical case be made against the existence of Internet discussion boards?
Gun Shop under Attack
Source: Photo courtesy of jaqian, http://www.flickr.com/photos/jaqian/478574894/
The headline from a local Oakland newspaper reported that a gun shop is closing due to unfair taxes. Alexandra J. Wall, “Jewish Gunshop Owner Closing Store; Cites Unfair Taxes,” Jweekly, July 21, 2000, accessed May 11, 2011, http://www.jweekly.com/article/full/13657/jewish-gunshop-owner-closing-store-cites-unfair-taxes. The gun shop’s name was Siegle’s Guns. Closing was inevitable, according to owner Mara Siegle, after Oakland residents passed Measure D, which levied a huge tax on gun dealers. They had to pay \$24 for every \$1,000 earned, in comparison to the \$1.20 per \$1,000 that all the other retailers in Oakland fork over. “No one can stay in business paying that kind of tax,” Siegle said while preparing her going-out-of-business sale. “And that’s exactly what Oakland wanted.”
No one disputes the point.
The disputes are about whether Oakland should want that and whether it’s fair for the city to use taxes as a weapon.
• Tracy Salkowitz says yes to both. “Except for hunting rifles, the sole purpose of weapons is to kill people.” Getting rid of gun shops, the logic follows, is a public welfare concern. And about the taxes that brought the store down? She’s “delighted” by them.
• Mara Siegle’s opinion is that people who don’t hunt and shoot for recreation don’t understand that guns are a legitimate pastime. “They don’t see this side,” she says, “because they don’t try to.” Further, she asserts, over the years gun owners have told her that they own guns to defend themselves.
• Outside the store, mingling customers agreed with Siegle. They said closing gun stores was the wrong way to fight crime and then cursed the city for the unjust taxes.
Amid the winners and losers, Mara Siegle certainly got the rottenest part of the deal. She has two sons, fifteen and seventeen, and she doesn’t know what she’ll do for income. “I need a job,” she said.
A hand-lettered sign posted in the store’s backroom for the benefit of Siegle’s five full-time employees displayed the phone number of the unemployment office. The sign said, “You paid for it, use it.”
Exercise \(5\)
1. With an eye on the concept of fairness, form an argument in favor of the drastically higher taxes imposed on gun shops.
2. Kant’s categorical imperative prohibits killing. Can it be transformed into an argument against a gun shop in Oakland?
3. Would an ethics of duties or an ethics of rights work better for Siegle as she defends her business? Why? What might her argument look like?
4. Unemployment benefits are the result of unemployment insurance, which is not optional. Workers are forced to pay a bit out of each paycheck to the federal government, and if they lose their job, they get a biweekly check partially covering lost wages.
• Would a libertarian approve of the unemployment insurance program?
• Would it be right for a libertarian gun shop owner—someone defending her business on libertarian grounds—to accept unemployment benefits after her shop is forced out of business by extreme taxes? Explain. | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/02%3A_Theories_of_Duties_and_Rights-_Traditional_Tools_for_Making_Decisions_in_Business_When_the_Means_Justify_the_Ends/2.05%3A_Case_Studies.txt |
Chapter 3 examines some theories guiding ethical decisions in business. It considers ethics that focuses on the consequences of what is done instead of prohibiting or allowing specific acts.
03: Theories of Consequence Ethics- Traditional Tools for Making Decisions in Business When the Ends Justify the Means
Learning Objectives
1. Define consequentialism in ethics.
Consequentialism Defined
What’s more important in ethics—what you do or what happens afterward because of what you did? People who believe ethics should be about what happens afterward are labeled consequentialists. They don’t care so much about your act; they want to know about the consequences.
If someone asks, “Should I lie?,” one answer is, “No, lying’s wrong. We all have a duty not to lie and therefore you shouldn’t do it, no matter what.” That’s not the consequentialist answer, though. Consequentialists will want to know about the effects. If the lie is about Bernie Madoff assuring everyone that he’s investing clients’ money in stocks when really he plans to steal it, that’s wrong. But if a defrauded, livid, and pistol-waving client tracks Madoff down on a crowded street and demands to know whether he’s Bernie Madoff, the ethically recommendable response might be, “People say I look like him, but really I’m Bill Martin.” The question, finally, for a consequentialist isn’t whether or not I should lie, it’s what happens if I do and if I don’t?
Since consequentialists are more worried about the outcome than the action, the central ethical concern is what kind of outcome should I want? Traditionally, there are three kinds of answers: the utilitarian, the altruist, and the egoist. Each one will be considered in this chapter.
Key Takeaway
• Consequentialist ethicists focus on the results of what you do, not what you do.
Exercise \(1\)
1. Under what scenario could a consequentialist defend the act of stealing?
2. Could a consequentialist recommend that a toy company lie about the age level a toy is designed for? What would be an example?
3.02: Utilitarianism- The Greater Good
Learning Objectives
1. Define utilitarian ethics.
2. Show how utilitarianism works in business.
3. Distinguish forms of utilitarianism.
4. Consider advantages and drawbacks of utilitarianism.
The College Board and Karen Dillard
“Have you seen,” the blog post reads, “their parking lot on a Saturday?” “CB-Karen Dillard Case Settled-No Cancelled Scores,” College Confidential, accessed May 15, 2011, http://talk.collegeconfidential.com/parents-forum/501843-cb-karen-dillard-case-settled-no-cancelled-scores.html. It’s packed. The lot belongs to Karen Dillard College Prep (KDCP), a test-preparation company in Dallas. Like the Princeton Review, they offer high schoolers courses designed to boost performance on the SAT. Very little real learning goes on in these classrooms; they’re more about techniques and tricks for maximizing scores. Test takers should know, for example, whether a test penalizes incorrect answers. If it doesn’t, you should take a few minutes at each section’s end to go through and just fill in a random bubble for all the questions you couldn’t reach so you’ll get some cheap points. If there is a penalty, though, then you should use your time to patiently work forward as far as you can go. Knowing the right strategy here can significantly boost your score. It’s a waste of brain space, though, for anything else in your life.
Some participants in KDCP—who paid as much as \$2,300 for the lessons—definitely got some score boosting for their money. It was unfair boosting, however; at least that’s the charge of the College Board, the company that produces and administers the SAT.
Here’s what happened. A KDCP employee’s brother was a high school principal, and he was there when the SATs were administered. At the end of those tests, everyone knows what test takers are instructed to do: stack the bubble sheets in one pile and the test booklets in the other and leave. The administrators then wrap everything up and send both the answer sheets and the booklets back to the College Board for scoring. The principal, though, was pulling a few test booklets out of the stack and sending them over to his brother’s company, KDCP. As it turns out, some of these pilfered tests were “live”—that is, sections of them were going to be used again in future tests. Now, you can see how getting a look at those booklets would be helpful for someone taking those future tests.
Other stolen booklets had been “retired,” meaning the specific questions inside were on their final application the day the principal grabbed them. So at least in these cases, students taking the test-prep course couldn’t count on seeing the very same questions come exam day. Even so, the College Board didn’t like this theft much better because they sell those retired tests to prep companies for good money.
When the College Board discovered the light-fingered principal and the KDCP advantage, they launched a lawsuit for infringement of copyright. Probably figuring they had nothing to lose, KDCP sued back. Paulina Mis, “College Board Sues Test-Prep Company, Countersuit Filed,” Scholarships.com, February 26, 2008, accessed May 15, 2011, http://www.scholarships.com/blog/high-school/college-board-sues-test-prep-company-countersuit-filed/161.
College Board also threatened—and this is what produced headlines in the local newspaper—to cancel the scores of the students who they determined had received an unfair advantage from the KDCP course. As Denton Record-Chronicle reported (and as you can imagine), the students and their families freaked out.Staci Hupp, “SAT Scores for Students Who Used Test Prep Firm May Be Thrown Out,” Denton Record Chronicle, February 22, 2008, accessed May 15, 2011. The scores and full application packages had already been delivered to colleges across the country, and score cancellation would have amounted to application cancellation. And since many of the students applied only to schools requiring the SAT, the threat amounted to at least temporary college cancellation. “I hope the College Board thinks this through,” said David Miller, a Plano attorney whose son was apparently on the blacklist. “If they have a problem with Karen Dillard, that’s one thing. But I hope they don’t punish kids who wanted to work hard.”
Predictably, the episode crescendoed with everyone lawyered up and suits threatened in all directions. In the end, the scores weren’t canceled. KDCP accepted a settlement calling for them to pay \$600,000 directly to the College Board and provide \$400,000 in free classes for high schoolers who’d otherwise be unable to afford the service. As for the principal who’d been lifting the test booklets, he got to keep his job, which pays about \$87,000 a year. The CEO of College Board, by the way, gets around \$830,000. “AETR Report Card,” Americans for Educational Testing Reform, accessed May 15, 2011, www.aetr.org/college-board.php. KDCP is a private company, so we don’t know how much Karen Dillard or her employees make. We do know they could absorb a million-dollar lawsuit without going into bankruptcy. Finally, the Plano school district in Texas—a well-to-do suburb north of Dallas—continues to produce some of the nation’s highest SAT score averages.
One Thief, Three Verdicts
Utilitarianism is a consequentialist ethics—the outcome matters, not the act. Among those who focus on outcomes, the utilitarians’ distinguishing belief is that we should pursue the greatest good for the greatest number. So we can act in whatever way we choose—we can be generous or miserly, honest or dishonest—but whatever we do, to get the utilitarian’s approval, the result should be more people happier. If that is the result, then the utilitarian needs to know nothing more to label the act ethically recommendable. (Note: Utility is a general term for usefulness and benefit, thus the theory’s name. In everyday language, however, we don’t talk about creating a greater utility but instead a greater good or happiness.)
In rudimentary terms, utilitarianism is a happiness calculation. When you’re considering doing something, you take each person who’ll be affected and ask whether they’ll end up happier, sadder, or it won’t make any difference. Now, those who won’t change don’t need to be counted. Next, for each person who’s happier, ask, how much happier? Put that amount on one side. For each who’s sadder, ask, how much sadder? That amount goes on the other side. Finally, add up each column and the greater sum indicates the ethically recommendable decision.
Utilitarian ethics function especially well in cases like this: You’re on the way to take the SAT, which will determine how the college application process goes (and, it feels like, more or less your entire life). Your car breaks down and you get there very late and the monitor is closing the door and you remember that…you forgot your required number 2 pencils. On a desk in the hall you notice a pencil. It’s gnawed and abandoned but not yours. Do you steal it? Someone who believes it’s an ethical duty to not steal will hesitate. But if you’re a utilitarian you’ll ask: Does taking it serve the greater good? It definitely helps you a lot, so there’s positive happiness accumulated on that side. What about the victim? Probably whoever owns it doesn’t care too much. Might not even notice it’s gone. Regardless, if you put your increased happiness on one side and weigh it against the victim’s hurt on the other, the end result is almost certainly a net happiness gain. So with a clean conscience you grab it and dash into the testing room. According to utilitarian reasoning, you’ve done the right thing ethically (assuming the pencil’s true owner isn’t coming up behind you in the same predicament).
Pushing this theory into the KDCP case, one tense ethical location is the principal lifting test booklets and sending them over to his brother at the test-prep center. Everything begins with a theft. The booklets do in fact belong to the College Board; they’re sent around for schools to use during testing and are meant to be returned afterward. So here there’s already the possibility of stopping and concluding that the principal’s act is wrong simply because stealing is wrong. Utilitarians, however, don’t want to move so quickly. They want to see the outcome before making an ethical judgment. On that front, there are two distinct outcomes: one covering the live tests, and the other the retired ones.
Live tests were those with sections that may appear again. When students at KDCP received them for practice, they were essentially receiving cheat sheets. Now for a utilitarian, the question is, does the situation serve the general good? When the testing’s done, the scores are reported, and the college admissions decisions made, will there be more overall happiness then there would’ve been had the tests not been stolen? It seems like the answer has to be no. Obviously those with great scores will be smiling, but many, many others will see their scores drop (since SATs are graded on a curve, or as a percentile). So there’s some major happiness for a few on one side balanced by unhappiness for many on the other. Then things get worse. When the cheating gets revealed, the vast majority of test takers who didn’t get the edge are going to be irritated, mad, or furious. Their parents too. Remember, it’s not only admission that’s at stake here but also financial aid, so the students who didn’t get the KDCP edge worry not only that maybe they should’ve gotten into a better school but also that they end up paying more too. Finally, the colleges will register a net loss: all their work in trying to admit students on the basis of fair, equal evaluations gets thrown into question.
Conclusion. The theft of live tests fails the utilitarian test. While a few students may come out better off and happier, the vast majority more than balances the effect with disappointment and anger. The greater good isn’t served.
In the case of the theft of “retired” tests where the principal forwarded to KDCP test questions that won’t reappear on future exams, it remains true that the tests were lifted from the College Board and it remains true that students who took the KDCP prep course will receive an advantage because they’re practicing the SAT. But the advantage doesn’t seem any greater than the one enjoyed by students all around the nation who purchased prep materials directly from the College Board and practiced for the exam by taking old tests. More—and this was a point KDCP made in their countersuit against the College Board—stealing the exams was the ethically right thing to do because it assured that students taking the KDCP prep course got the same level of practice and expertise as those using official College Board materials. If the tests hadn’t been stolen, then wouldn’t KDCP kids be at an unfair disadvantage when compared with others because their test practices hadn’t been as close to the real thing as others got? In the end, the argument goes, stealing the tests assured that as many people as possible who took prep courses got to practice on real exams.
Conclusion. The theft of the exams by the high school principal may conceivably be congratulated by a utilitarian because it increases general happiness. The students who practiced on old exams purchased from the College Board can’t complain. And as for those students at KDCP, their happiness increases since they can be confident that they’ve prepared as well as possible for the SAT.
The fact that a utilitarian argument can be used to justify the theft of test booklets, at least retired ones, doesn’t end the debate, however. Since the focus is on outcomes, all of them have to be considered. And one outcome that might occur if the theft is allowed is, obviously, that maybe other people will start thinking stealing exam books isn’t such a bad idea. If they do—if everyone decides to start stealing—it’s hard to see how anything could follow but chaos, anger, and definitely not happiness.
This discussion could continue as more people and consequences are factored in, but what won’t change is the basic utilitarian rule. What ought to be done is determined by looking at the big picture and deciding which acts increase total happiness at the end of the day when everyone is taken into account.
Should the Scores Be Canceled?
After it was discovered that KDCP students got to practice for the SATs with live exams, the hardest question facing the College Board was, should their scores be canceled? The utilitarian argument for not canceling is straightforward. Those with no scores may not go to college at all next year. This is real suffering, and if your aim is to increase happiness, then counting the exams is one step in that direction. It’s not the last step, though, because utilitarians at the College Board need to ask about everyone else’s happiness too: what’s the situation for all the others who took the exam but have never heard of KDCP? Unfortunately, letting the scores be counted is going to subtract from their happiness because the SAT is graded comparatively: one person doing well means everyone getting fewer correct answers sees their score drop, along with college choices and financial aid possibilities. Certainly it’s true that each of these decreases will be small since there were only a handful of suspect tests. Still, a descent, no matter how tiny, is a descent, and all the little bits add up.
What’s most notable, finally, about this decision is the imbalance. Including the scores of KDCP students will weigh a tremendous increase in happiness for a very few against a slight decrease for very many. Conversely, a few will be left very sad, and many slightly happier. So for a utilitarian, which is it? It’s hard to say. It is clear, however, that this uncertainty represents a serious practical problem with the ethical theory. In some situations you can imagine yourself in the shoes of the different people involved and, using your own experience and knowledge, estimate which decision will yield the most total happiness. In this situation, though, it seems almost impossible because there are so many people mixed up in the question.
Then things get still more difficult. For the utilitarian, it’s not enough to just decide what brings the most happiness to the most individuals right now; the future needs to be accounted for too. Utilitarianism is a true global ethics; you’re required to weigh everyone’s happiness and weigh it as best as you can as far into the future as possible. So if the deciders at the College Board follow a utilitarian route in opting to include (or cancel) the scores, they need to ask themselves—if we do, how will things be in ten years? In fifty? Again, these are hard questions but they don’t change anything fundamental. For the utilitarian, making the right decision continues to be about attempting to predict which choice will maximize happiness.
Utilitarianism and the Ethics of Salaries
When he wasn’t stealing test booklets and passing them on to KDCP, the principal in the elite Plano school district was dedicated to his main job: making sure students in his building receive an education qualifying them to do college-level work. Over at the College Board, the company’s CEO leads a complementary effort: producing tests to measure the quality of that preparation and consequently determine students’ scholastic aptitude. The principal, in other words, is paid to make sure high schoolers get an excellent education, and the CEO is paid to measure how excellent (or not) the education is.
Just from the job descriptions, who should get the higher salary? It’s tempting to say the principal. Doesn’t educating children have to be more important than measuring how well they’re educated? Wouldn’t we all rather be well educated and not know it than poorly educated and painfully aware of the fact?
Regardless, what’s striking about the salary that each of these two actually receives isn’t who gets more; it’s how much. The difference is almost ten times: \$87,000 for the principal versus the CEO’s \$830,000. Within the doctrine of utilitarianism, can such a divergence be justified?
Yes, but only if we can show that this particular salary structure brings about the greatest good, the highest level of happiness for everyone considered as a collective. It may be, for example, that objectively measuring student ability, even though it’s less important than instilling ability, is also much harder. In that case, a dramatically higher salary may be necessary in order to lure high-quality measuring talent. From there, it’s not difficult to fill out a utilitarian justification for the pay divergence. It could be that inaccurate testing would cause large amounts of unhappiness: students who worked hard for years would be frustrated when they were bettered by slackers who really didn’t know much but managed to score well on a test.
To broaden the point, if tremendous disparities in salary end up making people happier, then the disparities are ethical. Period. If they don’t, however, then they can no longer be defended. This differs from what a libertarian rights theorist might say here. For a libertarian—someone who believes individuals have an undeniable right to make and keep whatever they can in the world, regardless of how rich or poor anyone else may be—the response to the CEO’s mammoth salary is that he found a way to earn it fair and square, and everyone should quit complaining about it. Generalized happiness doesn’t matter, only the individual’s right to try to earn and keep as much as he or she can.
Can Money Buy Utilitarian Happiness? The Ford Pinto Case
Basic questions in business tend to be quantitative, and money is frequently the bottom line: How many dollars is it worth? What’s my salary? What’s the company’s profit? The basic question of utilitarianism is qualitative: how much happiness and sadness is there? Inevitably, it’s going to be difficult when businesses accustomed to bottom-line number decisions are forced to cross over and decide about general happiness. One of the most famous attempts to make the transition easier occurred back in the 1970s.
With gas prices on the rise, American car buyers were looking for smaller, more efficient models than Detroit was manufacturing. Japanese automakers were experts in just those kinds of vehicles and they were seizing market share at an alarming rate. Lee Iaccoca, Ford’s president, wanted to rush a car into production to compete. His model was the Pinto.Case facts taken from Manuel Velasquez, Business Ethics, Concepts and Cases, 6th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2006), 60–61.
A gas sipper slated to cost \$2,000 (about \$12,000 today), Ford rushed the machine through early production and testing. Along the way, unfortunately, they noticed a design problem: the gas tank’s positioning in the car’s rump left it vulnerable to rear-end collisions. In fact, when the rear-end hit came faster than twenty miles per hour, not only might the tank break, but gasoline could be splattered all the way up to the driver’s compartment. Fire, that meant, ignited by sparks or anything else could engulf those inside.
No car is perfectly safe, but this very scary vulnerability raised eyebrows. At Ford, a debate erupted about going ahead with the vehicle. On the legal end, the company stood on solid ground: government regulation at the time only required gas tanks to remain intact at collisions under twenty miles per hour. What about the ethics, though? The question about whether it was right to charge forward was unavoidable because rear-end accidents at speeds greater than twenty miles per hour happen—every day.
The decision was finally made in utilitarian terms. On one side, the company totaled up the dollar cost of redesigning the car’s gas tank. They calculated
• 12.5 million automobiles would eventually be sold,
• eleven dollars would be the final cost per car to implement the redesign.
Added up, that’s \$137 million total, with the money coming out of Pinto buyers’ pockets since the added production costs would get tacked onto the price tag. It’s a big number but it’s not that much per person: \$11 is about \$70 today. In this way, the Pinto situation faced by Ford executives is similar to the test cancellation question for the College Board: one option means only a little bit of suffering for specific individuals, but there are a lot of them.
On the other side of the Pinto question—and, again, this resembles the College Board predicament—if the decision is made to go ahead without the fix, there’s going to be a lot of suffering but only for a very few people. Ford predicted the damage done to those few people in the following ways:
• Death by burning for 180 buyers
• Serious burn injuries for another 180 buyers
• Twenty-one hundred vehicles burned beyond all repair
That’s a lot of damage, but how do you measure it? How do you compare it with the hike in the price tag? More generally, from a utilitarian perspective, is it better for a lot of people to suffer a little or for a few people to suffer a lot?
Ford answered both questions by directly attaching monetary values to each of the injuries and damages suffered:
• At the time, 1970, US Government regulatory agencies officially valued a human life at \$200,000. (That would be about \$1.2 million today if the government still kept this problematic measure.)
• Insurance companies valued a serious burn at \$67,000.
• The average resale value on subcompacts like the Pinto was \$700, which set that as the amount lost after a complete burnout.
The math coming out from this is (180 deaths × \$200,000) + (180 injuries × \$67,000) + (2,100 burned-out cars × \$700) = \$49 million. The result here is \$137 million worth of suffering for Pinto drivers if the car is redesigned and only \$49 million if it goes to the streets as is.
Ford sent the Pinto out. Over the next decade, according to Ford estimates, at least 60 people died in fiery accidents and at least 120 got seriously burned (skin-graft-level burns). No attempt was made to calculate the total number of burned vehicles. Shortly thereafter, the Pinto was phased out. No one has final numbers, but if the first decade is any indication, then the total cost came in under the original \$49 million estimate. According to a utilitarian argument, and assuming the premises concerning dollar values are accepted, Ford made the right decision back in 1970.
If every Pinto purchaser had been approached the day after buying the car, told the whole Ford story, and been offered to change their car along with eleven dollars for another one without the gas tank problem, how many would’ve handed the money over to avoid the long-shot risk? The number might’ve been very high, but that doesn’t sway a utilitarian conclusion. The theory demands that decision makers stubbornly keep their eye on overall happiness no matter how much pain a decision might cause certain individuals.
Versions of Utilitarian Happiness
Monetized utilitarianism attempts to measure happiness, to the extent possible, in terms of money. As the Ford Pinto case demonstrated, the advantage here is that it allows decisions about the greater good to be made in clear, objective terms. You add up the money on one side and the money on the other and the decision follows automatically. This is a very attractive benefit, especially when you’re dealing with large numbers of individuals or complex situations. Monetized utilitarianism allows you to keep your happiness calculations straight.
Two further varieties of utilitarianism are hedonistic and idealistic. Both seek to maximize human happiness, but their definitions of happiness differ. Hedonistic utilitarians trace back to Jeremy Bentham (England, around 1800). Bentham was a wealthy and odd man who left his fortune to the University College of London along with the stipulation that his mummified body be dressed and present at the institution. It remains there today. He sits in a wooden cabinet in the main building, though his head has been replaced by a wax model after pranking students repeatedly stole the real one. Bentham believed that pleasure and happiness are ultimately synonymous. Ethics, this means, seeks to maximize the pleasures—just about any sensation of pleasure—felt by individuals. But before dropping everything and heading out to the bars, it should be remembered that even the most hedonistic of the utilitarians believe that getting pleasure right now is good but not as good as maximizing the feeling over the long term. (Going out for drinks, in others words, instead of going to the library isn’t recommendable on the evening before midterms.)
A contemporary of Bentham, John Stuart Mill, basically agreed that ethics is about maximizing pleasure, but his more idealistic utilitarianism distinguished low and highbrow sensations. The kinds of raw, good feelings that both we and animals can find, according to Mill, are second-rate pleasures. Pleasures with higher and more real value include learning and learnedness. These aren’t physical joys so much as the delights of the mind and the imagination. For Mill, consequently, libraries and museums are scenes of abundant pleasure, much more than any bar.
This idealistic notion of utilitarianism fits quite well with the College Board’s response to the KDCP episode. First, deciding against canceling student scores seems like a way of keeping people on track to college and headed toward the kind of learning that rewards our cerebral inclinations. Further, awarding free prep classes to those unable to pay seems like another step in that direction, at least if it helps get them into college.
Versions of Utilitarian Regulation
A narrow distinction with far-reaching effects divides soft from hard utilitarianism. Soft utilitarianism is the standard version; when people talk about a utilitarian ethics, that’s generally what they mean. As a theory, soft utilitarianism is pretty laid back: an act is good if the outcome is more happiness in the world than we had before. Hard utilitarianism, on the other hand, demands more: an act is ethically recommendable only if the total benefits for everyone are greater than those produced by any other act.
According to the hard version, it’s not enough to do good; you must do the most good possible. As an example, think about the test-prep company KDCP under the microscope of utilitarian examination.
• When a soft utilitarian looks at KDCP, the company comes out just fine. High schoolers are learning test-taking skills and tricks that they’ll only use once but will help in achieving a better score and leave behind a sense that they’ve done all they can to reach their college goals. That means the general happiness level probably goes up—or at worst holds steady—because places like KDCP are out there.
• When a hard utilitarian looks at KDCP, however, the company doesn’t come off so well. Can we really say that this enterprise’s educational subject—test taking—is the very best use of teaching resources in terms of general welfare and happiness? And what about the money? Is SAT prep really the best way for society to spend its dollars? Wouldn’t a hard utilitarian have to recommend that the tuition money collected by the test-prep company get siphoned off to pay for, say, college tuition for students who otherwise wouldn’t be able to continue their studies at all?
If decisions about businesses are totally governed by the need to create the most happiness possible, then companies like KDCP that don’t contribute much to social well-being will quickly become endangered.
The demands of hard utilitarianism can be layered onto the ethical decision faced by the College Board in their courtroom battle with KDCP. Ultimately, the College Board opted to penalize the test-prep company by forcing it to offer some free classes for underprivileged students. Probably, the result was a bit more happiness in the world. The result wasn’t, however, the most happiness possible. If hard utilitarianism had driven the decision, then the College Board would’ve been forced to go for the jugular against KDCP, strip away all the money they could, and then use it to do the most good possible, which might have meant setting up a scholarship fund or something similar. That’s just a start, though. Next, to be true to hard utilitarianism, the College Board would need to focus on itself with hard questions. The costs of creating and applying tests including the SAT are tremendous, which makes it difficult to avoid this question: wouldn’t society as a whole be better off if the College Board were to be canceled and all their resources dedicated to, for example, creating a new university for students with learning disabilities?
Going beyond KDCP and the College Board, wouldn’t almost any private company fall under the threat of appropriation if hard utilitarians ran the world? While it’s true, for example, that the money spent on steak and wine at expensive Las Vegas restaurants probably increases happiness a bit, couldn’t that same cash do a lot more for the general welfare of people whose income makes Las Vegas an impossibly expensive dream? If it could, then the hard utilitarian will propose zipping up Las Vegas and rededicating the money.
Finally, since utilitarianism is about everyone’s total happiness, don’t hard questions start coming up about world conditions? Is it possible to defend the existence of McDonald’s in the United States while people are starving in other countries?
Conclusion. In theory, there’s not much divergence between soft and hard utilitarianism. But in terms of what actually happens out in the world when the theory gets applied, that’s a big difference. For private companies, it’s also a dangerous one.
Two further versions of utilitarian regulation are act and rule. Act utilitarianism affirms that a specific action is recommended if it increases happiness. This is the default form of utilitarianism, and what people usually mean when they talk about the theory. The separate rule-based version asserts that an action is morally right if it follows a rule that, when applied to everyone, increases general happiness.
The rule utilitarian asks whether we’d all be benefitted if everyone obeyed a rule such as “don’t steal.” If we would—if the general happiness level increases because the rule is there—then the rule utilitarian proposes that we all adhere to it. It’s important to note that rule utilitarians aren’t against stealing because it’s intrinsically wrong, as duty theorists may propose. The rule utilitarian is only against stealing if it makes the world less happy. If tomorrow it turns out that mass stealing serves the general good, then theft becomes the ethically right thing to do.
The sticky point for rule utilitarians involves special cases. If we make the rule that theft is wrong, consider what happens in the case from the chapter’s beginning: You forgot your pencil on SAT test day, and you spot one lying on an abandoned desk. If you don’t take it, no one’s going to be any happier, but you’ll be a lot sadder. So it seems like rule utilitarianism verges on defeating its own purpose, which is maximizing happiness no matter what.
On the other hand, there are also sticky points for act utilitarians. For example, if I go to Walmart tonight and steal a six-pack of beer, I’ll be pretty happy. And assuming I don’t get caught, no one will be any sadder. The loss to the company—a few dollars—will disappear in a balance sheet so huge that it’s hard to count the zeros. Of course if everyone starts stealing beers, that will cause a problem, but in practical terms, if one person does it once and gets away with it, it seems like an act utilitarian would have to approve. The world would be a happier place.
Advantages and Disadvantages of Utilitarian Ethics in Business
Basic utilitarianism is the soft, act version. These are the theory’s central advantages:
• Clarity and simplicity. In general terms, it’s easy to understand the idea that we should all act to increase the general welfare.
• Acceptability. The idea of bringing the greatest good to the greatest number coheres with common and popular ideas about what ethical guidance is supposed to provide.
• Flexibility. The weighing of individual actions in terms of their consequences allows for meaningful and firm ethical rules without requiring that everyone be treated identically no matter how different the particular situation. So the students whose scores were suspended by the College Board could see them reinstated, but that doesn’t mean the College Board will take the same action in the future (if, say, large numbers of people start stealing test booklets).
• Breadth. The focus on outcomes as registered by society overall makes the theory attractive for those interested in public policy. Utilitarianism provides a foundation and guidance for business regulation by government.
The central difficulties and disadvantages of utilitarianism include the following:
• Subjectivity. It can be hard to make the theory work because it’s difficult to know what makes happiness and unhappiness for specific individuals. When the College Board demanded that KDCP give free classes to underprivileged high schoolers, some paying students were probably happy to hear the news, but others probably fretted about paying for what others received free. And among those who received the classes, probably the amount of resulting happiness varied between them.
• Quantification. Happiness can’t be measured with a ruler or weighed on a scale; it’s hard to know exactly how much happiness and unhappiness any particular act produces. This translates into confusion at decision time. (Monetized utilitarianism, like that exhibited in the case of the Ford Pinto, responds to this confusion.)
• Apparent injustices. Utilitarian principles can produce specific decisions that seem wrong. A quick example is the dying grandmother who informs her son that she’s got \$200,000 stuffed into her mattress. She asks the son to divide the money with his brother. This brother, however, is a gambling alcoholic who’ll quickly fritter away his share. In that case, the utilitarian would recommend that the other brother—the responsible one with children to put through college—just keep all the money. That would produce the most happiness, but do we really want to deny grandma her last wish?
• The utilitarian monster is a hypothetical individual who really knows how to feel good. Imagine that someone or a certain group of people were found to have a much greater capacity to experience happiness than others. In that case, the strict utilitarian would have no choice but to put everyone else to work producing luxuries and other pleasures for these select individuals. In this hypothetical situation, there could even be an argument for forced labor as long as it could be shown that the servants’ suffering was minor compared to the great joy celebrated by those few who were served. Shifting this into economic and business terms, there’s a potential utilitarian argument here for vast wage disparities in the workplace.
• The utilitarian sacrifice is the selection of one person to suffer terribly so that others may be pleasured. Think of gladiatorial games in which a few contestants suffer miserably, but a tremendous number of spectators enjoy the thrill of the contest. Moving the same point from entertainment into the business of medical research, there’s a utilitarian argument here for drafting individuals—even against their will—to endure horrifying medical experiments if it could be shown that the experiments would, say, cure cancer, and so create tremendous happiness in the future.
Key Takeaways
• Utilitarianism judges specific decisions by examining the decision’s consequences.
• Utilitarianism defines right and wrong in terms of the happiness of a society’s members.
• Utilitarian ethics defines an act as good when its consequences bring the greatest good or happiness to the greatest number of people.
• There are a variety of specific forms of utilitarianism.
• Theoretically, utilitarianism is straightforward, but in practical terms it can be difficult to measure the happiness of individuals.
Exercise \(1\)
1. What is a utilitarian argument in favor of a college education? How does it differ from other reasons you might want to go to college or graduate school?
2. How could a utilitarian justify cheating on an exam?
3. What is a “global ethics”?
4. What practical problem with utilitarianism is (to some degree) resolved by monetized utilitarianism?
5. What are two advantages of a utilitarian ethics when compared with an ethics of duties?
6. What are two disadvantages of a utilitarian ethics when compared with an ethics of duties?
7. What’s an example from today’s world of a utilitarian monster?
8. What’s an example from today’s world of a utilitarian sacrifice? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/03%3A_Theories_of_Consequence_Ethics-_Traditional_Tools_for_Making_Decisions_in_Business_When_the_Ends_Justify_the_Means/3.01%3A_What_is_Consequentialism.txt |
Learning Objectives
1. Define altruistic ethics.
2. Show how altruism works in and with business.
3. Consider advantages and drawbacks of altruism.
TOMS Shoes
There is no Tom at TOMS Shoes. The company’s name actually came from the title for its social cause: Shoes for Tomorrow. Tomorrow shoes—TOMS Shoes. The shoes are given away to needy children in Argentina at a one-to-one rate: for every pair bought in the United States, TOMS delivers a pair down there.
They’re needed in Argentina’s poverty-stricken regions to prevent the spread of an infectious disease, one that flourishes in the local soil and rises up through the feet. A pair of shoes is all that’s needed to block the problem.
The project started when young Texan entrepreneur Blake Mycoskie vacationed in Argentina. Not the type to luxuriate in the hotel pool, he got out and learned about the country, good and bad, the food, the sweeping geography, the poverty and diseases. The foot infection, he discovered, was so devastating yet so easy to block that, according to his company’s website, he decided he had to do something about it. TOMS Shoes, “One for One Movement,” accessed May 15, 2011, www.toms.com/our-movement. Initially, he contemplated a charitable fund to buy shoes for the needy children, but that left his project subject to the ebb and flow of others’ generosity. It’d be better and more reliable, he determined, to link the community-service project with private enterprise and use revenues from a company to fund the charity. Quickly, Mycoskie determined that he could make the whole machine work most efficiently by starting a shoe company. Simultaneously, he could produce shoes for donation and shoes for sale to finance the effort. So we have TOMS Shoes.
Next, a kind of shoe to produce and sell was required. Mycoskie found inspiration in Argentina’s traditional alpargata. This is a cheap, workingman’s shoe, a slip-on made from canvas with rope soles. TOMS Shoes, accessed May 15, 2011, cdn2.tomsshoes.com/images/uploads/2006-oct-vogue.jpg. For the American adaptation, Mycoskie strengthened the sole, styled and colored the canvas, and added a brand label. The price also got jacked up. The originals cost a few dollars in Argentina; the adaptations cost about forty dollars here.
They’re a splashy hit. You find TOMS Shoes at trendy footwear shops, at Whole Foods grocery stores, and all over the Internet. At last check, about half a million pairs have been sold and an equal number donated. Total sales in seven figures isn’t far off, and the company was recently featured on a CNBC segment as an American business success story. Notably, TOMS achieved recognition on national TV sooner after its inception than almost any other enterprise in the program’s history. It all happened in fewer than four years.
Question: how did it get so big so fast? How did some guy transform from a wandering tourist to a captain of the shoe industry in less time than it takes to get a college degree? Answer: celebrities.
Blake Mycoskie’s got a warm, round face and a perfect smile. He’s got money from his preshoe projects and he’s smart too. He’s also got that contemporary bohemian look down with his bead necklace and wavy, shoulder-length hair. There’s no letdown beneath the chin line either; he’s fit (he was a tennis pro until nineteen). You get the idea. He commands attention from even Hollywood women, and he ended up coupled with the midrange star Maggie Grace. He introduced her to his TOMS Shoes concept, gave her a few pairs to wear around and show friends, and the ball started rolling. sharon_b, December 14, 2008 (5:24 p.m.), “Blake Mycoskie—he’s handsome, rich and helps children in the Third World,” Gossip Rocks, accessed May 15, 2011, http://www.gossiprocks.com/forum/news/90958-blake-mycoskie-hes-handsome-rich-helps-children-third-world.html.
A few parties later, Scarlett Johansson, Jessica Biel, Benicio Del Toro, Tobey Maguire, Sienna Miller, and Karl Lagerfeld were parading around in TOMS Shoes. There was no stopping it. Lesley M. M. Blume, “You Are What You Wear,” Huffington Post, July 30, 2008, accessed May 15, 2011, http://www.huffingtonpost.com/lesley-m-m-blume/you-are-what-you-wear_b_65967.html.
Today, when Blake Mycoskie introduces himself, it’s not as the CEO of his company; he says he’s the Chief Shoe Giver at TOMS Shoes, reflecting the idea that charity drives the thriving business, not the other way around.
Is TOMS Shoes Altruistic?
An action is morally right according to the altruist, and to the ethical theory of altruism, if the action’s consequences are more beneficial than unfavorable for everyone except the person who acts. That means the actor’s interests aren’t considered: the altruist does whatever can be done so that others will be happier.
It’s common to imagine the altruist as poverty stricken and self-sacrificing. When you live for everyone else as the altruist does, it’s no surprise that you can end up in pretty bad shape. You might get lucky and run into another altruist like yourself, but if you don’t, there’s not going to be anyone particularly dedicated to your well-being. On the positive side there’s nobility to the idea of dedicating everything to everyone else, but the plain truth is not many of us would choose to live like Gandhi or Mother Teresa.
It doesn’t have to be that way, though. A suffering life may be an effect of altruism, but it’s not a requirement. Living for others doesn’t mean you live poorly, only that there’s no guarantee you’ll live well. You might, however, live well. Blake Mycoskie demonstrates this critical element at the heart of altruism: it’s not about suffering or sacrificing; it’s about making clear-eyed decisions about the best way to make as many others as happy as possible. If you happen to live the good life along the way—partying with Maggie Grace, Sienna Miller, and friends because that’s the fastest route to publicize the TOMS Shoes enterprise—that doesn’t count against the project. It doesn’t count in favor either. All that matters, all that gets tallied up when the question gets asked about whether the altruist did good, is how things ended up for everyone else.
In the case of TOMS Shoes, the tallying is easy. The relatively wealthy shoe buyers in the United States come off well; they get cool, politically correct footwear to show friends along with a psychological lift from knowing they’re helping the less fortunate. On the other side, the rural Argentines obviously benefit also.
Some Rules of Altruism
Altruism is a consequentialist ethics. Like utilitarianism, no specific acts are prohibited or required; only outcomes matter. That explains why there aren’t lifestyle requirements for the altruist. Some live stoically like Gandhi while others like Mycoskie get the high life, but they’re both altruists as long as the goal of their lives and the reason for their actions is bringing happiness to others. Similarly, the altruist might be a criminal (Robin Hood) or a liar (see Socrates’s noble lie).
Like the utilitarian, most of the hard questions altruists face concern happiness. They include:
• The happiness definition. Exactly what counts as happiness? In the case of TOMS donating shoes to rural Argentines, the critical benefit is alleviation of disease and the suffering coming with it. Happiness, in other words, is defined here as a release from real, physical pain. On the other hand, with respect to the shoes sold in the States, the happiness is completely different; it’s a vague, good feeling that purchasers receive knowing their shopping is serving a social cause. How do we define happiness in a way that ropes in both these distinct experiences?
• Once happiness has been at least loosely defined, another question altruists face is the happiness measure: how do we know which is worth more, the alleviation of suffering from a disease or the warm happiness of serving a good cause? And even if the answer to that question is clear, how great is the difference, how can it be measured?
• Another altruism difficulty is happiness foresight. Even if donating shoes helps in the short term, are the recipients’ lives really going to be happier overall? Conditions are hard in the abandoned regions of the third world, and alleviation of one problem may just clear the way for another. So TOMS Shoes saves poverty-stricken Argentines from suffering a debilitating foot disease, but how much good are you really doing if you save people only so that they’re free to suffer aching hunger, miserable sickness in places lacking antibiotics, and hard manual labor because there’s no other work?
Altruism is a variety of selflessness, but it’s not the same thing; people may deny themselves or they may sacrifice themselves for all kinds of other reasons. For example, a soldier may die in combat, but that’s not altruism; that’s loyalty: it’s not sacrificing for everyone else but for a particular nation. The same may go for the political protestor who ends up jailed and forgotten forever. That’s self-sacrifice, but she did it for the cause and not for all the others. The fireman may lose his life rescuing a victim, but this is because he’s doing his job, not because he’s decided to live for the sake of others. All altruists, finally, are selfless, but not all those who sacrifice themselves are altruists.
Personal versus impersonal altruism distinguishes two kinds of altruists: those who practice altruism on their own and leave everyone else alone, and those who believe that everyone should act only to benefit others and without regard to their own well-being.
The Altruist in Business and the Business That Is Altruistic
TOMS Shoes shows that a business can be mounted to serve the welfare of others. A company aiming to serve an altruistic purpose doesn’t have to be organized altruistically, however. An individual truly dedicated to everyone else could start a more traditional company (a real estate firm, for example), work like a dog, turn massive profits, and in the end, donate everything to charity. It may even be that during the profit-making phase the altruist CEO is ruthless, exploiting workers and consumers to the maximum. All that’s fine as long as the general welfare is served in the end when all the suffering is toted up on one side and the happiness on the other. A business operation that isn’t at all altruistic, in other words, can be bent in that direction by an altruistic owner.
Going the other way, the business operation itself may be altruistic. For example, this comes from the College Board’s website, the About Us page: The College Board is a not-for-profit membership association whose mission is to connect students to college success and opportunity. “About Us,” College Board, accessed May 15, 2011, http://about.collegeboard.org.
That sounds like a good cause. The company doesn’t exist to make money but to implement testing that matches students with their best-fit colleges. It is, in other words, an altruistic enterprise, and the world, the argument could be made, is a better place because the College Board exists. But—and this is the important distinction—that doesn’t mean everyone who works at the College Board is selfless. Far from it, the CEO takes home \$830,000 a year. That money would buy a lot of shoes for the poverty-stricken in Argentina. So, there can be altruistic business organizations driven by workers who aren’t altruists.
A church is also a business organization with cash flows, budgets, and red and black ink. The same goes for Goodwill. Here’s their mission statement: “Goodwill Industries International enhances the dignity and quality of life of individuals, families and communities by eliminating barriers to opportunity and helping people in need reach their fullest potential through the power of work.” “Our Mission,” Goodwill Industries International, Inc., accessed May 15, 2011, www.goodwill.org/about-us/our-mission. So, the Salvation Army fits into the group of altruistic enterprises, of organizations that exist, like the College Board, to do public good. It’s distinct from the College Board, however, in that a very healthy percentage of those working inside the organization are themselves altruists—they’re working for the cause, not their own welfare. Think of the Salvation Army red kettle bell ringers around Christmas time.
Conclusion. Altruism connects with business in three basic ways. There are altruists who use normal, profit-driven business operations to do good. There are altruistic companies that do good by employing nonaltruistic workers. And there are altruistic organizations composed of altruistic individuals.
Advocating and Challenging Ethical Altruism
The arguments for and against an altruistic ethics overlap to a considerable extent with those listed under utilitarianism. The advantages include:
• Clarity and simplicity. People may disagree about exactly how much good a company like TOMS Shoes is really doing, but the overall idea that the founder is working so that others can be happier is easy to grasp.
• Acceptability. The idea of working for others grants an ethical sheen. No matter what you might think of someone as a person, it’s very difficult to criticize them in ethical terms if they really are dedicating themselves to the well-being of everyone else.
• Flexibility. Altruists have many ways of executing their beliefs.
The disadvantages of altruism include:
• Uncertainty about the happiness of others. Even if individuals decide to sacrifice their own welfare for the good of others, how do they know for sure what makes others happy?
• Shortchanging yourself. Even though altruism doesn’t require that the altruist live a miserable life, there doesn’t seem to be any clear reason why the altruist shouldn’t get an at least equal claim to happiness as everyone else (as in a utilitarian approach). Also, some critics suspect that altruism can be a way of escaping your own life: if you spend all your time volunteering, could it be that deep down you’re not a good soul so much as just afraid of going out into the competitive world and trying to win a good place for yourself?
Key Takeaways
• Altruism defines ethically good as any act that ends up increasing net happiness (or decreasing net unhappiness) when everything is taken into account except the actor’s increased or diminished happiness.
• Altruism doesn’t require living a miserable life.
• Altruism intersects with the business world in various ways.
Exercise \(1\)
1. Theoretically, could the most devoted altruist in a society also be its richest and happiest member? How?
2. Does Blake Mycoskie have to be an altruist for TOMS Shoes to be considered an altruistic enterprise?
3. Does TOMS Shoes have to be an altruistic enterprise for Mycoskie to be considered an altruist?
4. What are some other motives that may lead someone to live the life of an altruist? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/03%3A_Theories_of_Consequence_Ethics-_Traditional_Tools_for_Making_Decisions_in_Business_When_the_Ends_Justify_the_Means/3.03%3A_Altruism-_Everyone_Else.txt |
Learning Objectives
1. Define ethical egoism.
2. Show how egoism works in and with business.
3. Consider advantages and drawbacks of egoism.
Ethical Egoism
Ethical egoism: whatever action serves my self-interest is also the morally right action. What’s good for me in the sense that it gives me pleasure and happiness is also good in the sense that it’s the morally right thing to do.
Ethical egoism mirrors altruism: If I’m an altruist, I believe that actions ought to heighten the happiness of others in the world, and what happens to me is irrelevant. If I’m an egoist, I believe that actions ought to heighten my happiness, and what happens to others is irrelevant.
Could someone like Blake Mycoskie—someone widely recognized as an altruistic, social-cause hero—actually be an egoist? Yes. Consider things this way. Here’s a young guy and he’s out looking for money, celebrity, good parties, and a jaw-dropping girlfriend. It wouldn’t be the first time there was a guy like that.
Put yourself in his shoes and imagine you’re an ethical egoist: whatever’s good for you is good. Your situation is pretty clear, your moral responsibility lists what you should be trying to get, and the only question is how can I get it all?
That’s a tall order. Becoming a rock star would probably work, but there are a lot of people already out there going for it that way. The same goes for becoming a famous actor. Sports are another possibility; Mycoskie, in fact, made a run at pro tennis as a younger man, but like most who try, he couldn’t break into the upper echelon. So there are paths that may work, but they’re hard ones, it’s a real fight for every step forward.
If you’re smart—and Mycoskie obviously is—then you might look for a way to get what you want that doesn’t force you to compete so brutally with so many others. Even better, maybe you’ll look for a way that doesn’t present any competition at all, a brand new path to the wish list. The idea of a celebrity-driven shoe company that makes a profit but that also makes its founder a star in the eyes of the Hollywood stars is a pretty good strategy.
Obviously, no one can look deep into Mycoskie’s mind and determine exactly what drove him to found his enterprise. He may be an altruist or an egoist or something else, but what’s important is to outline how egoism can actually work in the world. It can work—though of course it doesn’t work this way every time—just like TOMS Shoes.
Egoism and Selfishness
When we hear the word egoist, an ugly profile typically comes to mind: self-centered, untrustworthy, pitiless, and callous with respect to others. Some egoists really are like that, but they don’t have to be that way. If you’re out to maximize your own happiness in the world, you might find that helping others is the shortest and fastest path to what you want. This is a very important point. Egoists aren’t against other people, they’re for themselves, and if helping others works for them, that’s what they’ll do. The case of TOMS Shoes fits right here. The company improves the lives of many; it raises the level of happiness in the world. And because it does that, the organization has had tremendous success, and because of that success, the Blake Mycoskie we’re imagining as an egoist is getting what he wants: money, great parties, and everyone loving him. In short, sometimes the best way to one’s own happiness is by helping others be happier.
That’s not always the way it works. Bernie Madoff destroyed families, stole people’s last dimes, and lived the high life all the way through. For an ethical egoist, the only blemish on his record is that he got caught.
Madoff did get caught, though, and this too needs to be factored into any consideration of egoists and how they relate to others. Just as egoists may help others because that serves their own interests, so too they may obey social customs and laws. It’s only important to note that they obey not out of deference to others or because it’s the morally right thing to do; they play by the rules because it’s the smart thing to do. They don’t want to end up rotting in jail.
A useful contrast can be drawn in this context between egoism and selfishness. Where egoism means putting your welfare above others’, selfishness is the refusal to see beyond yourself. Selfishness is the inability (or unwillingness) to recognize that there are others sharing the world, so it’s the selfish person, finally, who’s callous and insensitive to the wants and needs of others. For egoists, on the other hand, because working with others cooperatively can be an excellent way to satisfy their own desires, they may not be at all selfish; they may be just the opposite.
Enlightened Egoism, Cause Egoism, and the Invisible Hand
Enlightened egoism is the conviction that benefitting others—acting to increase their happiness—can serve the egoist’s self-interest just as much as the egoist’s acts directly in favor of him or herself. As opposed to altruism, which claims that it’s our ethical responsibility to serve others, the enlightened egoist’s generosity is a rational strategy, not a moral imperative. We don’t help others because we ought to: we help them because it can make sense when, ultimately, we only want to help ourselves.
One simple and generic manifestation of enlightened egoism is a social contract. For example, I agree not to steal from you as long as you agree not to steal from me. It’s not that I don’t take your things because I believe stealing is morally wrong; I leave you alone because it’s a good way to get you to leave me alone. On a less dramatic level, all of us form mini social contracts all the time. Just think of leading a group of people through one of those building exits that makes you cross two distinct banks of doors. If you’re first out, you’ll hold the door for those coming after, but then expect someone to hold the next door for you. Sure, some people hold the door because it’s good manners or something like that, but for most of us, if no one else ever held a door open for us, pretty soon we’d stop doing them the favor. It’s a trivial thing, of course, but in the real world people generally hold doors open for others because they’ve agreed to a social contract: everyone else does it for me; I’ll do it for them. That’s enlightened egoism, and it frequently works pretty well.
TOMS Shoes can be understood as a more sophisticated version of the same mentality. It’s hard to discern exactly what the contract would look like if someone tried to write it down, but it’s not hard to see the larger notion of enlightened egoism. Shoes are donated to others not because of a moral obligation but because serving the interests of others helps Blake Mycoskie serve his own. As long as shoe buyers keep holding up their end of the bargain by buying his product, Mycoskie will continue to help them be generous and feel good about themselves by donating pairs to people who need them.
Cause egoism is similar to, but also distinct from, enlightened egoism. Enlightened egoism works from the idea that helping others is a good way of helping myself. Cause egoism works from the idea that giving the appearance of helping others is a promising way to advance my own interests in business. As opposed to the enlightened egoist who will admit that he is out for himself but happy to benefit others along the way, the cause egoist claims to be mainly or only interested in benefiting others and then leverages that good publicity to help himself. Stated slightly differently, enlightened egoists respect others while pursuing their own interests, while cause egoists just fake it.
Adam Smith (1723–90) is known for making a connected point on the level of broad economic trade and capitalism. In the end, it usually doesn’t matter whether people actually care about the well-being of others, Smith maintains, because there exists an invisible hand at work in the marketplace. It leads individuals who are trying to get rich to enrich their society as well, and that enrichment happens regardless of whether serving the general welfare was part of the original plan. According to Smith, the person in business generally
intends only his own gain, but is led by an invisible hand to promote an end which was no part of the original intention. By pursuing his own interest he frequently promotes that of the society, and does so more effectively than when he directly intends to promote it.Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: Strahan and Cadell, 1776), bk. 4, chap. 2.
What’s the invisible hand? It’s the force of marketplace competition, which encourages or even requires individuals who want to make money to make the lives of others better in the process.
The invisible hand is a central point defenders of egoism in business often make when talking about the virtues of a me-first ethics. Egoism is good for me, but it frequently ends up being good for everyone else, too. If that’s right, then even those who believe the utilitarian ideal of the general welfare should guide business decisions may be forced to concede that we should all just become egoists.
Here’s a quick example. If you open a little takeout pizza shack near campus and your idea is to clear the maximum amount of money possible to pay your tuition, what kind of business are you going to run? Does it make sense to take a customer’s twelve dollars and then hand over an oily pie with cheap plastic cheese and only three pepperonis? No, in the name of pursuing your own happiness, you’re going to try to charge a bit less than Domino’s and give your customers something slightly better—maybe you’ll spread richer cheese, or toss on a few extra pepperonis. Regardless, you’re not doing this for the reason an altruist would; you’re not doing it because you sense an ethical obligation to make others’ lives better. As an egoist, you don’t care whether your customers are happier or not. But if you want your business to grow, you better care. And because you’re ethically required to help your business grow in order to make tuition money and so make yourself happier, you’re going to end up improving the pizza-eating experience at your school. Better food, less money. Everyone wins. We’re not talking Mother Teresa here, but if ethical goodness is defined as more happiness for more people, then the pizza place is ethically good. Further, anybody who wants to start up a successful pizza restaurant is, very likely, going to end up doing good. If you don’t, if you can’t offer some advantage, then no one’s going to buy your slices.
Going beyond the quality-of-life benefits of businesses in society, Smith leaned toward a second claim that’s far more controversial. He wrote that the entrepreneur trying to do well actually promotes society’s well-being more effectively than when directly intending to promote it. This is startling. In essence, it’s the claim that for the most dedicated altruist the most effective strategy for life in business is…to act like an egoist. Within the economic world at least, the best way for someone who cares only about the well-being of others to implement that conviction is to go out and run a successful profit-making enterprise.
Clearly, this is a very powerful argument for defenders of ethical egoism. If it’s true that egoists beat altruists at their own game (increasing the happiness of everyone else), then egoism wins the debate by default; we should all become egoists. Unfortunately, it’s impossible to prove this claim one way or the other. One thing is clear, however: Smith’s implicit criticism of do-gooders can be illustrated. Sometimes individuals who decide to act for the good of others (instead of seeking profit for themselves) really do end up making the world a worse place. Dr. Loretta Napoleoni has shown how attempts by Bono of U2 to help the destitute in Africa have actually brought them more misery. Can Tran, “Celebrities Raising Funds for Africa End Up Making Things ‘Worse,’” Ground Report, May 14, 2008, accessed May 15, 2011, www.groundreport.com/World/Celebrities-Raising-Funds-For-Africa-End-Up-Making/2861070. Bono threw a benefit concert and dedicated the proceeds to Africa’s most needy. The intention was good, but the plan wasn’t thought all the way through and the money ended up getting diverted to warlords who used it to buy guns and bullets.
Still, the fact that some altruistic endeavors actually make things worse doesn’t mean they’re all doomed. Just as surely as some fail, others succeed.
The same mixed success can be attributed to businesses acting only for their own welfare, only for profit. If it’s true that the pizza sellers help improve campus life, what about the entrepreneurial honor student who volunteers to write your term paper for a price? It’s hard to see how a pay-for-grades scheme benefits students in general, even though the writer may make a tidy profit, and that one student who paid for the work may come out pretty well.
The invisible hand is the belief that businesses out in the world trying to do well for themselves tend to do good for others too. It may even be that they do more good than generous altruists. It’s hard to know for sure, but it can be concluded that there’s a distance between ethical egoism in reality and the image of the egoist as a ruthless destroyer of broad social happiness.
Some Rules of Egoism
Egoism, like altruism, is a consequentialist ethics: the ends justify the means. If an egoist were at the helm of TOMS Shoes and he cared only about meeting beautiful people and making huge money, he’d have no scruples about lying all day long. There’d be no problem with smiling and insisting that the reason TOMS Shoes exists is to generate charitable shoe donations to the poor. All that matters for the egoist is that the lie works, that it serves the goal of making TOMS as attractive and profitable as possible. If it does, then deviating from the truth becomes the ethically recommendable route to follow.
Personal egoism versus impersonal egoism distinguishes these two views: the personal egoist in the business world does whatever’s necessary to maximize his or her own happiness. What others do, however, is considered their business. The impersonal egoist believes everyone should get up in the morning and do what’s best for themselves and without concern for the welfare of others.
An impersonal egoist may find comfort in the invisible hand argument that the best way for me to do right with respect to society in general is to get rich. Of course it’s true that there’s something crude in shameless moneygrubbing, but when you look at things with rational eyes, it is hard to avoid noticing that the kinds of advances that make lives better—cars affordably produced on assembly lines; drugs from Lipitor to ChapStick; cell phones; spill-proof pens; whatever—often trace back to someone saying, “I want to make some money for myself.”
Rational egoism versus psychological egoism distinguishes two reasons for being an ethical egoist. The rational version stands on the idea that egoism makes sense. In the world as it is, and given a choice between the many ethical orientations available, egoism is the most reasonable. The psychological egoist believes that, for each of us, putting our own interests in front of everyone else isn’t a choice; it’s a reality. We’re made that way. Maybe it’s something written into our genes or it’s part of the way our minds are wired, but regardless, according to the psychological egoist, we all care about ourselves before anyone else and at their expense if necessary.
Why would I rationally choose to be an egoist? Maybe because I figure that if I don’t look out for myself, no one will. Or maybe I think almost everyone else is that way, too, so I better play along or I’m going to get played. (The Mexicans have a pithy phrase of common wisdom for this, “O te chingas, o te chingan,” which means “either you screw everyone else, or they’ll screw you.”) Maybe I believe that doing well for myself helps me do good for others too. The list could be drawn out, but the point is that there are numerous reasons why an intelligent person may accept ethical egoism as the way to go.
As for those who subscribe to the theory of psychological egoism, obviously there’s no end of examples in business and history to support the idea that no matter how much we may want things to be otherwise, the plain truth is we’re made to look out for number one. On the other hand, one problem for psychological egoists is that there do seem to be examples of people doing things that are irreconcilable with the idea that we’re all only trying to make ourselves happier:
• Parents sacrificing for children. Any mom or dad who works overtime at some grinding job for cash to pay their children’s college tuition seems to be breaking the me-first rule. Here, the psychological egoist responds that, when you really think about it, there may be something there for the parents after all: it could be the pride in telling friends that their children are getting their degrees.
• Mother Teresa or similar religious-based advocates for the needy. Anyone spending their time and energy making things better for others, while living painfully modestly, seems like a good candidate to break the rule of psychological egoism. Here, the psychological egoist responds that perhaps they see a different reward for themselves than earthly pleasures. They may believe, for example, that their suffering on this earth will be more than compensated by paradise in heaven.
The Four Relations between Egoism and Business
Structurally, there are four possible relations between ethical egoism and business life:
1. You can have egoists in egoist organizations. This is mercenary capitalism. Individuals do whatever work is required so long as it benefits them to the maximum. Naturally, this kind of person might find a good home at a company entirely dedicated to maximizing its own health and success, which can mean one looking to maximize profits without other considerations. A good example is executives at the Countrywide mortgage firm. They OK’ed thousands of mortgages to clients who had no way to repay the money. Then they bundled and sold these mortgages to banks and other financial institutions, making a quick profit. When the loans later collapsed, those institutions fell into bankruptcy. The Countrywide executives quickly formed a new company to buy those same loans back at pennies on the dollar, thus once again turning millions in profits. Eric Lipton, “Ex-Leaders of Countrywide Profit from Bad Loans,” New York Times, March 3, 2009, accessed May 15, 2011, http://www.nytimes.com/2009/03/04/business/04penny.html.
2. You can have egoists in nonegoist organizations. Possibly, the CEO of the College Board fits into this category. His salary of just under a million dollars annually sounds pretty good, especially when you consider that he gets it working for a nonprofit company that exists to help high school students find the college best fitted to them. It’s also possible that Blake Mycoskie of TOMS Shoes fits this profile: he lives an extremely enviable life in the middle of a company set up to help people who almost no one envies.
3. You can have nonegoists in egoist organizations. Somewhere in the Countrywide mortgage company we could surely find someone who purchased shoes from TOMS because they wanted to participate in the project of helping the rural poor in Argentina.
4. You can have nonegoists in nonegoist organizations. Think of the red kettle bell ringers popping up outside malls around the holiday season.
Advocating and Challenging Ethical Egoism
The arguments for an egoistic ethics include the following:
• Clarity and simplicity. Everybody understands what it means to look out for themselves first.
• Practicality. Many ethical theories claim to protect our individual interests, but each of us knows ourselves and our own interests best. So doesn’t it make sense that we as individuals take the lead? Further, with respect to creating happiness for ourselves, there’s no one closer to the action than us. So, again, doesn’t it make sense that each of us should be assigned that responsibility?
• Sincerity. For those subscribing to psychological egoism, there’s a certain amount of honesty in this ethics not found in others. If our real motive beneath everything else is to provide for our own happiness first, then shouldn’t we just recognize and say that? It’s better to be sincere and admit that the reason we don’t steal is so that others don’t steal from us instead of inventing some other explanations which sound nice but are ultimately bogus.
• Unintended consequences. In the business world, the concept of the invisible hand allows egoists to claim that their actions end up actually helping others and may help them more than direct charity or similar altruistic actions.
• Finally, there’s a broad argument in favor of egoism that concerns dignity. If you’re out in the world being altruistic, it’s natural to assume that those benefiting from your generosity will be grateful. Sometimes they’re not, though. Sometimes the people we try to help repay us with spite and resentment. They do because there’s something condescending about helping others; there’s a message wrapped up in the aid that those who receive it are incapable of taking care of themselves and need someone superior to look out for them. This is especially palpable in the case of panhandlers. If you drop a dollar into their hat, it’s hard to not also send along the accusation that their existence is base and shameful (you refuse to look them in the eye; you drop the money and hurry away). To the extent that’s right, an egoism that expects people to look out for themselves and spurns charity may actually be the best way to demonstrate respect for others and to acknowledge their dignity.
Arguments against ethical egoism include the following:
• Egoism isn’t ethics. The reason we have ethics is because there are so many people in the world and in business who care only about themselves. The entire idea of ethics, the reasoning goes, is to set up some rules for acting that rescue us from a cruel reality where everyone’s just looking out for number one.
• Egoism ignores blatant wrongs. Stealing candy from a baby—or running a company selling crappy baby food—strikes most of us as unacceptable, but the rules of egoism dictate that those are recommendable actions as long as you can be assured that they’ll serve your interests.
• Psychological egoism is not true. The idea that we have no choice but to pursue our own welfare before anything else is demonstrated to be false millions of times every day; it’s wrong every time someone makes an anonymous contribution to a cause or goes out of their way to help another without expecting anything in return.
Key Takeaways
• Egoism defines ethically good as any act that raises the actor’s overall happiness (or decreases unhappiness) without counting anyone else’s increased or diminished happiness.
• Egoism does not mean ignoring the existence and welfare of others, though they are not necessarily advocated either.
• Though egoists act in the name of their own happiness, others may benefit.
• Egoism intersects with the business world in various ways.
Exercise \(1\)
• Egoism defines ethically good as any act that raises the actor’s overall happiness (or decreases unhappiness) without counting anyone else’s increased or diminished happiness.
• Egoism does not mean ignoring the existence and welfare of others, though they are not necessarily advocated either.
• Though egoists act in the name of their own happiness, others may benefit.
• Egoism intersects with the business world in various ways. | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/03%3A_Theories_of_Consequence_Ethics-_Traditional_Tools_for_Making_Decisions_in_Business_When_the_Ends_Justify_the_Means/3.04%3A_Egoism-_Just_Me.txt |
Cheaters
Source: Photo courtesy of S. Brusseau.
KDCP is Karen Dillard’s company specialized in preparing students to ace the Scholastic Aptitude Test. At least some of the paying students received a solid testing-day advantage: besides teaching the typical tips and pointers, KDCP acquired stolen SAT tests and used them in their training sessions. It’s unclear how many of the questions that students practiced on subsequently turned up on the SATs they took, but some certainly did. The company that produces the SAT, the College Board, cried foul and took KDCP to court. The lawsuit fell into the category of copyright infringement, but the real meat of the claim was that KDCP helped kids cheat, they got caught, and now they should pay.
The College Board’s case was very strong. After KDCP accepted the cold reality that they were going to get hammered, they agreed to a settlement offer from the College Board that included this provision: KDCP would provide \$400,000 worth of free SAT prep classes to high schoolers who couldn’t afford to pay the bill themselves. missypie, April 29, 2008 (2:22 p.m.), “CB-Karen Dillard case settled-no cancelled scores,” College Confidential, accessed May 15, 2011, http://talk.collegeconfidential.com/parents-forum/501843-cb-karen-dillard-case-settled-no-cancelled-scores.html.
Exercise \(1\)
1. Can you form a quick list of people who’d benefit because of this decision and others who’d end up on the losing side? Then, considering the situation globally and from a utilitarian perspective, what would need to be true for the settlement offer to be ethically recommendable?
2. As for those receiving the course for free—it’s probably safe to assume that their happiness increases. Something for nothing is good. But what about the students who still have to pay for the course? Some may be gladdened to hear that more students get the opportunity, but others will see things differently; they’ll focus on the fact that their parents are working and saving money to pay for the course, while others get it for nothing. Some of those who paid probably actually earned the money themselves at some disagreeable, minimum wage McJob. Maybe they served popcorn in the movie theater to one of those others who later on applied and got a hardship exemption.
• Starting from this frustration and unhappiness on the part of those who pay full price, can you form a utilitarian case against the settlement’s free classes?
• From a utilitarian perspective, could the College Board have improved the settlement by adding the stipulation that the settlement’s terms (and therefore the free classes) not be publicly disclosed?
• Once word got out, could a utilitarian recommend that the College Board lie or that it release a statement saying, “No free classes were part of the settlement”?
3. There was talk about canceling the scores of those students who took the SAT after benefitting from the KDCP classes that offered access to the stolen exam booklets. The students and their parents protested vigorously, pointing out that they’d simply signed up for test prep, just like students all across the nation. They knew nothing about the theft and they presumably didn’t know they were practicing on questions that might actually appear on their exam day. From the perspective of rule utilitarianism, what’s the case for canceling their scores? From the perspective of act utilitarianism, what’s the case for reinstating the scores?
4. The College Board CEO makes around \$830,000 a year.
• What is a utilitarian case for radically lowering his salary?
• If you were a utilitarian and you had the chance—and you were sure you wouldn’t get caught—would you steal the money from the guy’s bank account? Why or why not?
5. It could be that part of what the College Board hoped to gain through this settlement requiring free classes for the underprivileged was some positive publicity, some burnishing of their image as the good guys, the socially responsible company, the ones who do the right thing.
• Outline the case for this being an act of an altruistic company.
• Outline the case for this being an act of an egoistic company.
UFC
Source: Photo courtesy of Kaloozer, http://www.flickr.com/photos/kalooz/3942634378/.
Ultimate Fighting Championship (UFC) got off to a crushing start. In one of the earliest matches, Tank Abbott, a six-footer weighing 280 pounds, faced John Matua, who was two inches taller and weighed a whopping four hundred pounds. Their combat styles were as different as their sizes. Abbott called himself a pitfighter. Matua was an expert in more refined techniques: he’d honed the skills of wrestling and applying pressure holds. His skill—which was also a noble and ancient Hawaiian tradition—was the martial art called Kuialua.
The evening went poorly for the artist. Abbott nailed him with two roundhouses before applying a skull-cracking headbutt. The match was only seconds old and Matua was down and so knocked out that his eyes weren’t even closed, just glazed and staring absently at the ceiling. The rest of his body was convulsing. The referee charged toward the defenseless fighter, but Abbott was closer and slammed an elbow down on Matua’s pale face. Abbott tried to stand up and ram another, but the referee was now close enough to pull him away. As blood spurted everywhere and medics rushed to save the loser, Abbott stood above Matua and ridiculed him for being fat. David Plotz, “Fight Clubbed,” Slate, November 17, 1999, accessed May 15, 2011, http://www.slate.com/id/46344.
The tape of Abbott’s brutal skills and pitiless attitude shot through the Internet. He became—briefly—famous and omnipresent, even getting a guest appearance on the goofy, family-friendly sitcom Friends.
A US senator also saw the tape but reacted differently. Calling it barbaric and a human form of cockfighting, he initiated a crusade to get the UFC banned. Media executives were pressured to not beam the matches onto public TVs, and doctors were drafted to report that UFC fighters (like professional boxers) would likely suffer long-term brain damage. In the heat of the offensive, even diehard advocates agreed the sport might be a bit raw, and the UFC’s original motto—“There are no rules!”—got slightly modified. Headbutting, eye-gouging, and fish-hooking (sticking your finger into an opponent’s orifice and ripping it open) were banned.
No matter what anyone thinks of UFC, it convincingly demonstrates that blood resembles sex. Both sell, and people like to watch. The proof is that today UFC events are among the most viewed in the world, among the most profitable, and—this is the one part that hasn’t changed since the gritty beginning—among the most brutal.
Exercise \(2\)
1. Two of the common arguments against ultimate fighting—and the two main reasons the US senator argued to get the events banned—are the following:
• They’re brutal; UFC celebrates violence and hatred and injury, and therefore, it’s immoral.
• Besides the bumps, bruises, and broken bones—which usually heal up—the fighters also suffer long-term and incurable brain damage. Therefore, the sport is immoral even though it might be true that in their prime, the fighters make enough money to compensate the physical suffering endured in the octagon.
How could a utilitarian defend the UFC against these two criticisms?
2. How could the concept of the utilitarian sacrifice apply to John Matua?
3. How would a hedonistic utilitarian’s reaction to UFC differ from an idealistic utilitarian’s reaction? Is there anything at all in UFC that might convince an idealistic utilitarian to promote the sport as ethically positive?
4. How could a proponent of monetized utilitarianism begin portioning up the experiences of Abbott, Matua, the UFC sponsors, and the spectators in order to construct a mathematical formula (like Ford did with the Pinto) to decide whether UFC should be banned?
5. Think of UFC as a business, one compared to a biotech company that pioneers cutting-edge, life-saving drugs. Now, how would a utilitarian decide which one of these two companies was the more ethically respectable?
6. Why might an altruist sign up to be a UFC fighter? Why might an egoist sign up to be a UFC fighter?
Lottery
Source: Photo courtesy of Alan Levine, http://www.flickr.com/photos/cogdog/81199624.
In her blog Majikthise, Lindsay Beyerstein writes, “State lotteries are often justified on the grounds that they raise money for social programs, especially those that target the neediest members of society. However, the poorest members of society tend to spend (and, by design lose) the most on lottery tickets. Some state lottery proceeds fund programs that benefit everyone, not just the poor. Often state lottery money is being systematically redistributed upward—from lotto players to suburban schools, for example.” Lindsay Beyerstein, “Lotteries as Regressive Taxes,” Majikthise (blog), January 23, 2006, accessed May 15, 2011, http://majikthise.typepad.com/majikthise_/2006/01/lotteries_as_re.html.
Exercise \(3\)
1. How is the lottery an example of the utilitarian monster?
2. How can you set yourself up to argue in favor of or against the ethical existence of the lottery in terms of monetized utilitarianism?
3. Lotteries are about money and about fun—that is, even for the losers, there’s a benefit in the thrill of watching the numbers turn up. Could the case be made that, from a hedonistic utilitarian standpoint, the lottery is ethically recommendable because it serves the welfare not only of the winner but also of the millions of losers?
4. One of Lindsay Beyerstein’s concerns is that the lottery tends to redistribute money from the poor toward the rich.
• Does a utilitarian necessarily consider this redistribution unethical?
• What kinds of things would a utilitarian have to look into to decide whether the inverse Robin Hooding is necessarily a bad thing?
5. The lotteries under discussion here are run by states, and Lindsay Beyerstein is not a big fan. She calls these lotteries “a tax on idiocy” meaning, presumably, that people are just throwing their money away every time they buy a ticket. Now, one of the arguments in favor of egoism as an ethical stance is that no one knows what makes each of us happy better than each of us. So, it follows, we should all just try to get what we want and leave other people alone. How can this view of egoism be fashioned to respond to the idea that the lottery is a tax on idiocy?
Honest Tea
Source: Photo courtesy of Arnold Gatilao, www.flickr.com/photos/arndog/1210077306/.
Seth Goldman founded Honest Tea in 1998. He calls himself the TeaEO (as opposed to CEO) and his original product was a bottled tea drink with no additives beyond a bit of sugar. Crisp and natural—that was the product’s main selling point. It wasn’t the only selling point, though. The others aren’t in the bottle, they’re in the company making it. Honest Tea is a small enterprise composed of good people. As the company website relates, “A commitment to social responsibility is central to Honest Tea’s identity and purpose. The company strives for authenticity, integrity and purity, in our products and in the way we do business.…Honest Tea seeks to create honest relationships with our employees, suppliers, customers and with the communities in which we do business.” “Our Mission,” Honest, accessed May 15, 2011, www.honesttea.com/mission/about/overview.
Buy Honest Tea, the message is, because the people behind it are trustworthy; they are the kind of entrepreneurs you want to support.
The mission statement also relates that when Honest Tea gives business to suppliers, “we will attempt to choose the option that better addresses the needs of economically disadvantaged communities.” “Our Mission,” Honest, accessed May 15, 2011, www.honesttea.com/mission/about/overview. They’ll give the business, for example, to the company in a poverty-stricken area because, they figure, those people really need the jobs. Also, and to round out this socially concerned image, the company promotes ecological (“sustainability”) concerns and fair trade practices: “Honest Tea is committed to the well-being of the folks along the value chain who help bring our products to market. We seek out suppliers that practice sustainable farming and demonstrate respect for individual workers and their families.” “Our Mission,” Honest, accessed May 15, 2011, www.honesttea.com/mission/about/overview.
Summing up, Honest Tea provides a natural product, helps the poor, treats people with respect, and saves the planet. It’s a pretty striking corporate profile.
It’s also a profile that sells. It does because when you hand over your money for one of their bottles, you’re confident that you’re not fattening the coffers of some moneygrubbing executive in a New York penthouse who’d lace drinks with chemicals or anything else that served to raise profits. For many consumers, that’s good to know.
Honest Tea started selling in Whole Foods and then spread all over, even to the White House fridges because it’s a presidential favorite. Revenues are zooming up through the dozens of millions. In 2008, the Coca-Cola Company bought a 40 percent share of Honest Tea for \$43 million. It’s a rampantly successful company.
Featured as part of a series in the Washington Post in 2009, the company’s founder, Seth Goldman, was asked about his enterprise and his perspective on corporate philanthropy, meaning cash donations to good causes. Goldman said, “Of course there’s nothing wrong with charity, but the best way for companies to become good citizens is through the way they operate their business.” Here are two of his examples: “On Leadership: Seth Goldman,” Washington Post, accessed May 15, 2011, http://views.washingtonpost.com/leadership/panelists/2009/11/the-biggest-dollars.html.
• Switching from Styrofoam to postconsumer waste might help a packaging company make a more meaningful contribution to sustainability than a token donation to an environmental nonprofit.
• Investing in a local production facility or even a community bank could help support a local economy more effectively than a donation to a nearby jobs program.
Organizations in the economic world, Goldman believes, can do the most good by doing good themselves as opposed to doing well (making money) and then outsourcing their generosity and social responsibility by donating part of their profits to charities. That may be true, or it may not be, but it’s certain that Goldman is quite good at making the case. He’s had a lot of practice since he’s outlined his ideas not just in the Post but in as many papers and magazines as he can find. Honest Tea’s drinks are always featured prominently in these flattering articles, which are especially complimentary when you consider that Honest Tea doesn’t have to pay a penny for them.
Exercise \(4\)
1. Make the case that Seth Goldman founded Honest Tea as an expression of his utilitarian ethics.
• What kinds of people are affected by the Honest Tea organization? Which groups might benefit from Honest Tea and how? Which groups might not benefit?
• Would this be a hedonistic or idealistic utilitarianism? Why?
• Would it be possible to construe Honest Tea within a framework of monetized utilitarianism?
• Would this be a soft or hard utilitarianism?
2. Make the case that Seth Goldman founded Honest Tea as an expression of his ethical altruism.
• Altruists serve the welfare of others. How does Honest Tea serve people’s welfare?
• What would have to be true about Goldman in terms of his particular abilities and skills for this enterprise to fall under the heading of altruism?
• Does Goldman sound more like a personal or an impersonal altruist?
3. Make the case that Seth Goldman founded Honest Tea as an expression of his ethical egoism.
• What are some of the benefits Goldman could derive from Honest Tea?
• Before running Honest Tea, Goldman was a big-time mutual fund manager. What kind of benefits could Honest Tea have offered that he couldn’t find in the world of finance?
• Does Goldman sound more like a personal or an impersonal egoist?
• In the real world, does it make any difference whether Goldman does enlightened egoism or cause egoism?
4. In this case study, two kinds of drink manufacturers are contrasted: Honest Tea and the hypothetical drink company run by some mercenary businessman lacing drinks with bad chemicals to maximize profits. Looking at this contrast, how could a defender of egoism claim that the best way for healthy drinks to make their way into the general public’s hands (in the medium and long term, anyway) is for Goldman and the mercenary businessman and everyone else to all be egoists?
5. Assume that Seth Goldman is a cause egoist, someone faking concern for the general welfare in order to provide for his own happiness and pleasure. How could the concept of the invisible hand be introduced to make the claim that Goldman is actually doing more good for the general welfare than he would if he were a utilitarian or even an altruist?
Your Business
Source: Photo courtesy of Paul Sapiano, http://www.flickr.com/photos/peasap/935756569
Think about something you do with passion or expertise—a dish you like to cook and eat, a sport you play, any unique skill or ability you’ve developed—and figure out a way to turn it into a small business. For example, you like baking cookies, so you open a bake shop, or you like hockey and could imagine an improved stick to invent and market.
Exercise \(5\)
1. If your business is like most others, you’re going to need some money to get it up and going, more money than you’ve got right now. That means you’ll need to find a partner for your venture, someone to help you get the cash together and then run things afterward. Would you prefer a utilitarian, an altruist, or an egoist for your partner? Why?
2. Do you think the invisible hand would be in effect for your business? Just by trying to make money, do you imagine you’d end up improving people’s lives? If this business works, is it even possible that you’d help others more than you would by volunteering time for a charity organization? Elaborate.
3. Assume that doing good in society and not just doing well (making money) is important to you. Within the business you have in mind, with which of these three options do you suspect you’d accomplish more general good?
• Just making money and trusting the invisible hand to take care of the rest
• Making money and donating part of it to charity—that is, to people specialized in serving the general welfare
• Attempting to do good within your business by, for example, buying recycled materials or by paying wages slightly above what people could get for the same work at other companies
4. Is there a potential cause egoism angle to your business? Could you set it up to make it seem like the reason you’re running your enterprise is to help others when really you’re just trying to make money? For a consequentialist, is there anything wrong with that? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/03%3A_Theories_of_Consequence_Ethics-_Traditional_Tools_for_Making_Decisions_in_Business_When_the_Ends_Justify_the_Means/3.05%3A_Case_Studies.txt |
Chapter 4 examines some theories guiding ethical decisions in business. It considers reactions to the possibility that there are no universal definitions of right and wrong, only different customs that change from one society to another.
04: Theories Responding to the Challenge of Cultural Relativism
Learning Objectives
1. Define cultural relativism.
2. Show how cultural relativism defies traditional ethics.
Nietzsche and the End of Traditional Ethics
“God is dead,” the declaration attributed to Friedrich Nietzsche, stands along with “I think, therefore I am” (René Descartes, 1641) as philosophy’s most popularized—and parodied—phrases. The t-shirt proclaiming “Nietzsche is dead, signed, God” is funny, but it doesn’t quite answer what Nietzsche was saying in the late 1800s. What Nietzsche meant to launch was not only an assault on a certain religion but also a suspicion of the idea that there’s one source of final justice for all reality. Nietzsche proposed that different cultures and people each produce their own moral recommendations and prohibitions, and there’s no way to indisputably prove that one set is simply and universally preferable to another. The suspicion that there’s no final appeal—and therefore the values and morality practiced by a community can’t be dismissed as wrong or inferior to those practiced elsewhere—is called cultural relativism.
Example: For most of us, the killing of a newborn would be among the most heinous of immoral acts; a perpetrator would need to be purely evil or completely mad. The Inuit Eskimos, however, regularly practiced female infanticide during their prehistory, and it was neither evil nor insane. Their brutal living conditions required a population imbalance tipped toward hunters (males). Without that gender selecting, the plain fact was the entire group faced starvation. At another place and time, Bernal Diaz’s The Conquest of New Spain recounts the Spanish invasion of the Americas and includes multiple reports of newborns sacrificed in bloody ceremonies that made perfect sense to the locals, but left Spaniards astonished and appalled. The ethics of infanticide, the point is, differ from one culture and time to another. Further, these differences seem irreconcilable: it’s extremely difficult to see how we could convince the Inuit of the past to adopt our morality or how they could convince us to adopt theirs. And if that’s right, then maybe it no longer makes sense to talk about right and wrong in general terms as though there’s a set of rules applying to everyone; instead, there are only rights and wrongs as defined within a specific society.
Finally, if you accept the cultural relativist premise, then you’re rejecting the foundation of traditional ethics. You’re rejecting the idea that if we think carefully and expertly enough, we’ll be able to formulate rules for action that everyone—people in all times, places, and communities—must obey if they want to consider themselves ethically responsible.
Cultural Relativism in Business Ethics
In the world of international business, Entrepreneur magazine introduces the pitfalls of ethical variation across cultures with this statement from Steve Veltkamp, president of Biz\$hop, an American import-export business: “Bribery is a common way of doing business in a lot of foreign places.”Moira Allen, “Here Comes the Bribe,” Entrepreneur, October 2000, accessed May 12, 2011, http://www.entrepreneur.com/magazine/entrepreneur/2000/october/32636.html.
If that’s true, then US businesses trying to expand into markets abroad—and competing with local businesses already established there—are probably going to consider doing what everyone else is doing, which means getting in on the bribery action. As the Entrepreneur article points out, however, this leads to a problem: “While bribes are expected in many countries, the United States’ 1977 Foreign Corrupt Practices Act prohibits payments made with the aim of gaining or maintaining business.”
So American hands are tied. If a construction company is bidding on the contract to build an airport in a foreign nation, one where the local politicians will be expecting to get their palms greased, they’re at a distinct disadvantage since they’re not allowed to play by the local rules. Still there is (as there almost always is) a loophole: “Not all payments are prohibited by the act. Some payments are acceptable if they don’t violate local laws. Gifts, for instance, to officers working for foreign corporations are legal.”
There’s no bribing, but gifting, apparently, gets a green light. There’s a problem here, too, however: “It can be difficult to determine the difference between a gift and a bribe in a given situation. ‘If you give a gift to someone and it leads to a business deal, is that a bribe or a gift?’ asks Veltkamp. ‘In some cultures, gift-giving is an entrenched part of doing business. If you look at it in a certain sense, maybe it’s a bribe, since they won’t talk to you until you’ve made that gesture.’”
Now what? Over there, cash changes hands and it’s called an acceptable gift, while those watching from back here see an illegal bribe.
There are two ways of looking at this dilemma. One is to say, well, this has to be one or the other, either a gift or a bribe; it has to be either moral or immoral. Given that, we need to take out our traditional tools—our basic duties, the utilitarian doctrine that we should act to serve the greater good, and so on—and figure out which it is. Nietzsche went the other way, though. He said that situations like this don’t show that we need to use ethics to figure out which side is right; instead, the situation shows what moral rules really are: just a set of opinions that a group of people share and nothing more. In the United States we believe it’s wrong to grease palms, and so it is. In some other places they believe it’s honorable to hand money under the table, and so it is.
If that’s true, then specific convictions of right and wrong in business ethics will never be anything but cultural fashions, beliefs some community somewhere decides to hold up for a while until they decide to believe something else. Anything, the reasoning goes, may be morally good or bad in the economic world; it just depends on where you happen to be, at what time, and who else is around.
Key Takeaways
• Cultural relativism is the suspicion that values and morality are culture specific—they’re just what the community believes and not the result of universal reason.
• For cultural relativists, because all moral guidelines originate within specific cultures, there’s no way to dismiss one set of rules as wrong or inferior to those developed in another culture.
Exercise \(1\)
1. Why do you imagine the term cultural relativism was chosen to mean what it does?
2. Do you believe cultures are irreconcilably different? Or is it that deep down people are people and we’re really all the same? How does this distinction relate to the difference between cultural relativism and traditional theories of ethics? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/04%3A_Theories_Responding_to_the_Challenge_of_Cultural_Relativism/4.01%3A_What_is_Cultural_Relativism.txt |
Learning Objectives
1. Define Nietzsche’s eternal return of the same.
2. Show how the idea of the eternal return provides guidance for professional life.
3. Consider the advantages and a drawback of the eternal return.
Responding to Cultural Relativism by Leaving Common Morality Behind
If, along with cultural relativists, you accept that rules distinguishing right from wrong shift around from place to place and time to time, it becomes difficult to keep faith in morality. It’s difficult because verdicts seem flimsy and impermanent, and because this hard question seems inescapable: Why should I go out of my way to do the right thing today if what counts as the right thing might change tomorrow?
One response to the question is to give up on morality, disrespect the whole idea by labeling all the customary regulations—don’t lie, don’t steal, strive for the greatest good for the greatest number—a giant sham. Then you can live without the inhibiting limits of moral codes. You can go beyond any idea of good and evil and lead an unconstrained life exuberantly celebrating everything you want to do and be.
Wallace Souza: TV Reporter, Politician, and Dealer
Some careers are more vivid and alive than others. TV crime reporting is intense work, especially the action-type shows where the reporter races to the scene, interviews witnesses, and tracks down shady characters. Politics is another throbbing life; the adrenalin of crime chasing isn’t there, but you get the brimming confidence and energy that comes with power, with deciding what others can and can’t do. Drug dealing excites too, in its way, with thrilling danger and the pleasures of fast money. People, finally, who want to live exuberantly, who prefer risk to caution and find it easy to say things like “you only go around once” are probably going to find something attractive in these lines of work and may opt for one or another.
Then there’s Wallace Souza. He opted for all three. At the same time. The most visible of his roles—TV reporter—also yielded the most visible success. His program aired from the Brazilian state of Amazonas, a jungley place far from cosmopolitan São Paulo and touristy Rio de Janeiro. Known as a haven for cocaine cartels, and as a training ground for revolutionary militants charging into neighboring Columbia and Venezuela, it’s a natural spot to bring cameras and look for dramatic action. A number of reporters were stationed in the region, but none seemed so uncannily skilled at reaching scenes first and getting video over the airwaves than Mr. Souza. In fact, on occasion, he even reached scenes before the police.
The dogged TV reporting, along with Souza’s editorializing complaints about the region’s jaded criminals, made him a popular hero and sealed his bid for a seat in the local congress. He didn’t allow his state capital work to interfere with his TV role, however. Actually, the two jobs fit together well: one day he was reporting on the deplorable free-for-all in the jungle and the next he was in the capital meeting with high-ranking police officers, reviewing their strategies and proposing laws to fix things.
The perfect image began to crack, though, when it was revealed that the reason Souza so frequently reached the best crime scenes first is that he was paying hit men to assassinate local drug dealers. He wasn’t, it turned out, just the first to know about the crimes, he knew even before they happened. In an especially brazen move, during one of his last TV programs, he put up pictures of several notorious criminals and asked his viewers to phone in and vote on which one they’d like to see killed.
At this point, Souza seemed like an overzealous crusader: he was drawing vivid attention to the crime plague and doing something about it with his hit men. You could doubt his methods, but his dedication to his community’s welfare seemed noble—until it was revealed that he was actually also a major drug dealer. And the criminals getting killed and shown on his program weren’t just random outlaws; they were Souza’s drug-trade competitors. Dom Phillips, “Brazil Crime Show Host ‘Used Murder to Boost Ratings,’” Times, August 13, 2009, accessed May 12, 2011, http://www.timesonline.co.uk/tol/news/world/us_and_americas/article6793072.ece.
What Is the Eternal Return of the Same?
One report on Souza’s exploits included the suggestion that his willingness to cross every moral line—to lie, traffic drugs, order killings, whatever—fit him for the title of the Antichrist. Danny Gallagher, “Brazilian Crime Show Host Kills for Ratings?,” TV Squad, August 14, 2009, accessed May 12, 2011, http://www.tvsquad.com/2009/08/14/brazilian-crime-show-host-kills-for-ratings.
That title, as it turns out, was one Nietzsche enjoyed assigning to himself. It’s definitely also a fit for Souza in the sense that he seemed to live without shame, fear, or regard for good and evil. What’s notable about Souza’s business ventures is that they pay no heed to the very idea of morals. It’s not that they skirt some rules or follow some guidelines while disobeying others; it’s not like he’s trying to get away with something—it’s much more like morality doesn’t exist. Now, bringing this back to Nietzsche, who shared the sentiments, the question Nietzsche asked himself was, if morality really is canceled, then what? How should we live? The answer was a thought experiment called the eternal return of the same.
Imagine, Nietzsche proposed, that every decision you make and everything you feel, say, and do will have to be repeated forever—that is, at the end of your life, you die and are immediately reborn right back in the same year and place where everything started the time before, and you do it all again in exactly the same way. Existence becomes an infinite loop. With that disturbing idea established, Nietzsche converted it into a proposal for life: we should always act as though the eternal return were real. Do, Nietzsche says, what you would if you had to live with the choice over and over again forever. The eternal return, finally, gives us a reason to do one thing and not another: it guides us in a world without morals.
How Does the Eternal Return Work?
Start with the eternal return as it could be applied to an altruist, to someone dedicating life to helping others. One way to do altruism would be by working for a nonprofit international organization that goes to poverty-wrecked places like Amazonas and helps coca farmers (the coca leaf is the base for cocaine) shift their farms to less socially damaging crops. This would be difficult work. You might figure on doing it though, getting through it, and feeling like you’ve done some good in the world. But would you do it infinitely? Would you be willing to suffer through that existence once and again forever? Remember, the world would never get better; every time you’d just go back to being born on earth just the way it was before. Obviously, people can make their own decisions, but it seems fairly likely that under the condition of the eternal return there’d be fewer people dedicating themselves—and sacrificing their own comfort and interests—to social well-being.
What about some other lines of work? Would there be fewer snowplow operators, long-haul pilots, teachers willing to work in troubled schools? What kind of professional lives, Nietzsche forces us to ask, would be too hellish, bothersome, or exhausting to be repeated forever? Those lives, whatever they are, get filtered by the eternal return; they get removed from consideration.
If certain careers and aspirations are out, then what’s in? What kind of existence in the economic world does the eternal return recommend? One possibility is Wallace Souza. The question is, why would his career trajectory fit the eternal return?
The job of a reporter is fast and dramatic, the kind of thing many imagine themselves doing if they weren’t tied down by other commitments. People with children frequently feel an obligation to get into a safe and conservative line of work, one producing a steady paycheck. Others feel a responsibility toward their aged parents and a corresponding obligation to not stray too far just in case something goes wrong. So trekking off into the Brazilian jungle in search of drug operations may well be exciting—most of us would probably concede that—but it’d be irreconcilable with many family responsibilities. One thing the eternal return does, however, is seriously increase the burden of those responsibilities. When you sacrifice something you want to do because of a sense of obligation, you may be able to swallow the loss once, but Nietzsche is demanding that you take it down over and over again. Family responsibilities may count, but at what point do you say “enough”? Can anyone oblige you to sacrifice doing what you really want forever?
Taking the next step into Souza’s amoral but dramatic career, assuming you do decide to become a crime reporter, and you’re inside the eternal return where everything will recur infinitely, then aren’t you going to go about making your reporting work as exciting and successful as possible? Probably, yes. So why not hire some hit men to fire things up a bit? Normally, of course, our moral compass tells us that killing others to get ahead isn’t really an option. But with all morality canceled, it becomes an option, one just like any other. Be a banker, be a reporter, be a killer, there’s no real difference. Just choose the one you’d most like to do repeatedly without end.
Souza also chose to be a drug dealer. Again, this is one of those jobs many would find exciting and satisfying. Thrills and easy money are attractive; that’s part of the reason Hollywood produces so many films about traffickers and their lives. Most of us wouldn’t actually do something like that, though, at least partially because dealing drugs feels morally wrong. But inside the eternal return, that shame factor falls away; when it does, the number of people entering this field of work might well increase.
It’s critical to note that Nietzsche’s eternal return is not the idea that you should go off and be a crime-reporting, hit man–hiring drug dealer. Instead, Souza’s life just exemplifies one thing that could happen in the world of your career if you accept Nietzsche’s proposal of living beyond any traditional moral limit. Regardless, what the eternal return definitely does do is force you to make decisions about your professional life in very different terms than those presented by traditional ethical theories. There’s no consideration of sweeping duties; there’s just you and a simple decision: the life you choose now will be repeated forever, so which will yours be?
What’s the Reward of Morality?
One of the strengths of Nietzsche’s idea is that it forces a very important question: Why should I want to be morally responsible? Why should a salesman be honest when lying could win her a healthy commission? Why should a factory owner worry about pollution spewing from his plant when he lives in a city five hundred miles away? Now, a full elaboration of this question would be handled in an airy philosophy class, not an applied course in business ethics. Nietzsche, however, allows a taste of the discussion by puncturing one of the basic motivations many feel for being virtuous: the conviction that there’ll be a reward later for doing the right thing today.
The certainty of this reward is a critical element of many religious beliefs: when you die, there’ll be a final judgment and you’ll enjoy heaven or suffer punishment at the other extreme, depending on how you behaved on earth. A similar logic underwrites Hinduism’s concept of reincarnation: the life you are born into next will be determined by the way you live now. This discussion could be drawn out in more directions, but no matter what, Nietzsche spoils the idea that you take the moral high road because you’ll be repaid for it later. Within the eternal return, there is no later; all that ever happens is exactly the same thing again.
Advantages and a Drawback of the Eternal Return
One advantage of the eternal return is that it adds gravity to life. Forcing you to accept every decision you make as one you’ll repeat forever is compelling you to take those decisions seriously, to think them through. Another connected advantage of the eternal return is that it forces you to make your own decisions. By getting rid of all guidelines proposed by ethics, and by making your reality the one that will repeat forever, Nietzsche forces you to be who you are.
The disadvantage of the eternal return is Wallace Souza. If everyone is just out there being themselves, how are we going to live together? How can we make peaceful and harmonious societies when all anyone ever thinks about is what’s best for themselves forever?
Key Takeaways
• The eternal return is a thought experiment in which you imagine that the life you choose will repeat forever.
• According to the eternal return, when faced with a dilemma in the business world—what career should I choose, should I kill (or maybe just lie or cheat) to get ahead?—you should imagine living the decision over and over again forever.
• The eternal return maximizes individuality but does little to help individuals live together in a community.
Exercise \(1\)
1. In your own words, what is the eternal return?
2. Why might the eternal return be considered a reasonable response to cultural relativism?
3. Write down some factors leading to a significant decision you’ve made. It could be about choosing a field of study or a career path. Now, can you walk through each of the factors within the eternal return? Are there any decisions you made that you’d take back and change?
4. If you knew the eternal return was true, could you still make the reasonable decision to choose an altruistic profession? Why or why not? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/04%3A_Theories_Responding_to_the_Challenge_of_Cultural_Relativism/4.02%3A_Nietzsche%27s_Eternal_Return_of_the_Same.txt |
Learning Objectives
1. Define cultural ethics.
2. Consider how cultural ethics works in the business world.
3. Examine the truth of cultural ethics.
4. Consider advantages and drawbacks of a culturalist ethics.
What Is Cultural Ethics?
Culturalists embrace the idea that moral doctrines are just the rules a community believes, and they accept that there’s no way to prove one society’s values better than another. Culturalists don’t, however, follow Nietzsche in taking that as a reason to turn away from all traditional moral regulation; instead, it’s a reason to accept and endorse whichever guidelines are currently in effect wherever you happen to be. The old adage, “when in Rome, do as the Romans do,” isn’t too far from where we’re at here.
Gift or Bribe or Both?
The Entrepreneur magazine article posed a problem for Americans going overseas to do business. In some places, passing money under the table is necessary to spark negotiations and win contracts. However, bribery is illegal in the United States, and US law makes it illegal for Americans to do that kind of thing abroad. Gifts, on the other hand, are allowed. But, according to the Entrepreneur article, it can be difficult to determine the difference between a gift and a bribe. In some cultures, a gesture may be seen as a gift, and in others it looks like a bribe.
Looking at this uncertainty, what a culturalist sees is not ambiguity about whether handing the money over to a potential client is a legal gift or an illegal bribe. That’s not it at all. A culturalist sees it as both a gift and a bribe. In one culture—a nation overseas where the payment is occurring and where similar payments always occur when business is getting done—there are no moral qualms. It’s right to give a cash gift because that’s the rule of the country; it’s the way things are commonly and properly done there. By contrast, from the perspective of American business culture, the conclusion that’s drawn with equal force is that it’s an immoral bribe because that’s what US customs and normal practices tell us.
Cultural Ethics and International Bribery
Culturalists see moral rules as fixed onto specific societies, but that doesn’t help anyone know what to do when confronted with an unfamiliar set of beliefs. How, the really important question is, does a culturalist act when forced to make decisions in a place and among people whose beliefs are different and unfamiliar? The Entrepreneur interview with Steve Veltkamp provides one answer.
What can you do if your overseas associate demands a bribe? Veltkamp doesn't recommend asking embassies or consulates for assistance, as “they have to stick to the official line.” Instead, he believes “the best resource in almost every country of the world is the U.S. Chamber of Commerce, where you can find Americans who live in the country and understand how things are done.” Moira Allen, “Here Comes the Bribe,” Entrepreneur, October 2000, accessed May 12, 2011, http://www.entrepreneur.com/magazine/entrepreneur/2000/october/32636.html.
Immediately you can see how different the culturalist approach is to moral dilemmas. The message is: get in touch with the locals and try to do as they would in the same situation.
Most traditional ethical theories go in exactly the opposite direction. They say that it doesn’t necessarily matter what people are actually doing. Stronger, the entire point of studying ethics has normally been to escape conventional wisdom and ingrained habits; the idea of doing what we ought to do requires a step away from those things and a cold, rational look at the situation. So, a morality based on duties sets up guidelines including don’t lie, don’t steal and appeals to men and women in business to follow them. Acting in an ethically responsible way in the world means obeying the dictates and refusing to be swayed by what the guy in the next cubicle is up to. Handing someone money under the table, consequently, while publicly insisting that everything’s on the up and up can’t be condoned no matter what anyone else does; it can’t be right because it entails at least implicit lying.
More specifically for the culturalist, Entrepreneur advises overseas business people to avoid seeking guidance from embassies or consulates because those people have to stick to “the official line.” What’s the official line? Presumably, it’s the set of practices delineated and approved by the State Department back in Washington, DC. The strength of these practices is that they’re formed to be universal, to work at every embassy everywhere in the world. A culturalist, however, looks at that and says it’s silly. There are no practices that work everywhere in the world. The advice government bureaucrats give is worthless; it’s less than worthless because it departs from the error of conceiving ethics as a set of rules fitting a transnational reality. What people in business should actually do is get in contact with people who really know something about ethics, and that requires turning to the locals, including the chamber of commerce, because they’re on the scene.
Conclusion. The culturalist deals with the question about whether a bribe is ethically respectable by ignoring all dictates received from other places and obeying the customs and standard practices of those who live and work where the decision is being made.
Cultural Ethics and the News Reporting of Wallace Souza
Another example of how culturalist ethics works comes from the flamboyant TV reporter Wallace Souza. Like many action crime reporters the world over, he raced to violent scenes hoping to get the first and best video. What counts, however, as good video in Brazil is different from what typically gets shown in the United States. Here’s a description of what Souza sent over the airwaves: “In one of Mr. Souza’s shows on his Canal Livre programme, a reporter approached a still-smouldering body in a forest. ‘It smells like a barbecue,’ he says. ‘It is a man. It has the smell of burning meat. The impression is that it was in the early hours…it was an execution.’” Dom Phillips, “Brazil Crime Show Host ‘Used Murder to Boost Ratings,’” Times, August 13, 2009, accessed May 12, 2011, http://www.timesonline.co.uk/tol/news/world/us_and_americas/article6793072.ece.
This is not the kind of report we see in the US media, and one of the differences is the ethics. Typically in the United States, a certain respect is accorded to the deceased, even if they’re criminals. It’s considered an exploitation to directly show dead bodies, especially smoldering ones. There’s quite a bit of cultural analysis that would go into this prohibition, but simplifying, it’s not just that reporters hold an ethical responsibility to others to not exploit their deaths graphically; they also have a responsibility to viewers to not show images that may be (or probably would be) disturbing. By contrast, and as the Souza report shows, in Brazil the rules are different and this kind of visual makes it over the airwaves without raising eyebrows or triggering moral objections.
More generally, the question about what you’re allowed to show on TV to boost the ratings and so make more money is an extremely rich area of examples for cultural ethics. How graphic is the violence allowed to be on CSI Miami? How far is the wardrobe malfunction allowed to go on the Real Housewives of Orange County? These kinds of basic questions about decency and ratings (which means advertising revenue) seem tailor made for those who believe the answers don’t depend on anything more than what people in a certain culture will accept. They seem cut out for those believing that the value we call decency is nothing more (or less) than the line drawn between the number of people who will watch and the number who turn the TV off in disgust.
Is Culturalist Ethics True?
If it’s true that there’s no ethics but the kind a culturalist proposes, then this book loses a good deal of its usefulness. It’s lost because the main object is to help readers form and justify rules to guide their professional lives. Conceding that the culturalists are right, however, is also admitting that there’s no reason to carefully analyze problems: you’re far better served just checking around to see what most other people are doing in similar situations. Ethics isn’t a test of your ability to think reasonably and independently; it’s more a responsibility to follow the crowd.
Culturalism isn’t true, however, at least not necessarily. You can see that in the reasoning underneath the cultural approach. The reasoning starts with an observation:
In certain societies, handing money under the table is commonly considered an appropriate, ethically respectable part of business activity, and in others it’s considered both illegal and unethical.
And moves quickly to a conclusion:
Right and wrong in the business world is nothing more than what’s commonly considered right and wrong in a specific community.
On the surface, this argument looks all right, but thinking it through carefully leads to the conclusion that it’s not valid. A valid argument is one where the conclusion necessarily follows from the premises. For example, if you start from the definition that all unmarried men are bachelors, and then you observe that your friend John is an unmarried man, you can, in fact, conclude that he’s a bachelor. You must conclude that. But that’s not the situation with the culturalist argument because the conclusion doesn’t necessarily follow from the premise. Just because no broad international agreement has been reached about what counts as bribery doesn’t mean no agreement will ever be reached. Or making the same point more generally, just because no transcultural theory based on universal reason has yet to conquer all local beliefs and habits everywhere on the globe doesn’t mean no such theory will ever accomplish that goal.
Taking the same situation in the less ambiguous world of the physical sciences, there was a time when some believed the earth centered the sun and planets, while others believed the sun was at the center, but that didn’t mean the dispute would linger forever. Eventually, tools were found to convince everyone that one side was right. So too in business ethics: one day an enterprising ethicist may find a way to indisputably prove on the grounds of a universal and reasonable argument that greasing palms is a bribe and not a gift, and it’s immoral, not moral. We don’t know if that will happen, but it might. Consequently, the fact that we’re unsure now as to whether any single ethics can deal with the whole world doesn’t require shooting to the other extreme and saying there’ll never be anything but what people in specific nations believe and that’s it. The culturalist argument, in other words, isn’t necessarily persuasive.
It is worrisome, though. And until someone can find a way to do for ethics what scientists did for the question about the earth’s relation to the planets, there will always be individuals who suspect that no such proof will ever come. Count Nietzsche among them. In the field of contemporary philosophy and ethics, those who share the suspicion—those who doubt that no matter how hard we try we’ll never be able to get beyond our basic cultural perspectives and disagreements—belong to a movement named postmodernism.
What Are Some Advantages and Drawbacks of Culturalist Ethics?
One general advantage of a culturalist ethics is that it allows people to be respectful of others and their culture. A deep component of any society’s existence, uniqueness, and dignity in the world is its signature moral beliefs, what the people find right and wrong. A culturalist takes that identity seriously and makes no attempt to change or interfere. More, a culturalist explicitly acknowledges that there’s no way to compare one culture against another as better and worse. Though you can describe differences, you can’t say one set of moral truths is better than another because all moral truths are nothing more than what a society chooses to believe.
A more specific advantage of a culturalist ethics in the economic and business world is that it adapts well to contemporary reality. Over the last decades we’ve seen an explosion of international commerce, of large corporations tearing loose from specific nations and functioning globally. This economic surge has outpaced the corresponding understanding surge: we have no trouble switching dollars for euros or for yen, and we can buy Heineken beer from Germany and ride in a Honda made in Japan, but few of us speak English, German, and Japanese. In that kind of situation, one where some dilemmas in business ethics end up involving people we can’t really talk to, culturalism provides a reasonable way to manage uncertainties. When we’re in the United States, we follow American customs. If we’re sent on an overseas trade venture to Germany or Japan, we pretty much do as they normally do there. Just in practical terms, that may well be the easiest way to work and succeed in the world, and a culturalist ethics allows a coherent justification for the strategy.
The Disadvantages
The major disadvantage of a culturalist ethics is that it doesn’t leave any clear path to making things better. If a community’s recommended ethical compass is just their customs and normal practices, then it’s difficult to see how certain ingrained habits—say business bribery—can be picked up, examined, and then rejected as unethical. In fact, there’s no reason why bribery should be examined at all. Since moral right and wrong is just what the locals do, it makes no sense to try to change anything.
This view stands in stark contrast with what we usually believe—or at least would like to believe—about ethics: there can be progress; we can become better. In science, we know progress occurs all the time. Our collective knowledge about the sun’s position relative to the planets went from wrong to right with time and effort, and we’d like the same to happen for moral uncertainties. That’s why it’s so easy to imagine that bribery is a dirty, third-world practice, and part of our responsibility as a wealthy and developed nation is to lead the way in cleaning it up. We clean the moral world of bad business ethics just like our scientists rid the physical world of misperceptions. More, that’s a central aim of America’s antibribery legislation as it applies to overseas acts: it’s to cure other cultures of their bad habits. If you’re a culturalist, however, then the bad habit isn’t bribery; it’s one nation trying to impose a morality on another.
However you may come down on the question about whether nations should be trying to improve ethical customs in other places, what’s inescapable is that if you’re a culturalist, you don’t have any ground to stand on when it comes to criticizing the moral practices of businessmen and women in foreign countries. You don’t because what’s going on elsewhere is an independent and legitimate ethical system and can’t be judged inferior to our own.
Another problem with a culturalist ethics is that it provides few routes to resolving conflicts within a society. For example, should I be allowed to go into business for myself on the land I bought in the middle of a residential neighborhood by opening a motorcycle bar? In Houston, the answer’s yes. There’s a community consensus there that owning a piece of land allows you to do (almost) whatever you want with it. In legal terms, that translates into Houston being the only major American city without zoning regulations. Up the road in Dallas, however, there’s a similar community consensus that the rights of landownership are curtailed by the rights of nearby landowners. The result is strict zoning laws likely prohibiting Harley conventions in the middle of family neighborhoods. At this point, a culturalist has no problem; people in Houston have their codes of right and wrong and people in Dallas have theirs. What happens, though, in Austin, Texas, which is about midway between Houston and Dallas? What if about half the population believes in landowner rights at all costs and the other half goes for a more community-oriented approach? A cultural ethics provides few tools for resolving the dispute beyond sitting and waiting for one side or the other to take control of the town. This means ethics isn’t helping us solve disagreements; it only arrives when, really, it’s no longer needed.
Key Takeaways
• Proponents of cultural ethics embrace the idea that moral doctrines are just the rules, beliefs, and customs of specific communities.
• Doing the right thing within a culturalist framework relies less on traditional ethical reasoning and more on detecting local habits.
• The culturalist view of ethics is neither true nor false. It’s a reaction to the world as it is: a place with vastly divergent sets of moral codes.
• A culturalist ethics respects other societies and their practices but loses solid hope for ethical progress.
Exercise \(1\)
1. If you’re doing business overseas as a cultural ethicist, why would it make sense to consult the local chamber of commerce? Who else might you consult for moral guidance? Why?
2. You go abroad to win a contract and discover that a cash gift is necessary, so you hand it over and win the business. On returning to the United States, you put the \$200 gift on your expense report. The boss is infuriated, calls your act an “unethical, wrongheaded bribe” and says she won’t reimburse you the \$200. What arguments could you use to convince her that you did the right thing and should be reimbursed?
3. Souza’s bloody TV program is popular in Brazil, especially the parts where he shows video of horridly dead bodies. How could a culturalist argue that the episodes should not be shown on American TV?
4. A cultural ethics is neither true nor false. Explain. | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/04%3A_Theories_Responding_to_the_Challenge_of_Cultural_Relativism/4.03%3A_Cultural_Ethics.txt |
Learning Objectives
1. Define virtue ethics.
2. Elaborate basic virtues and show how they work in business.
3. Indicate how virtue is acquired.
4. Note an advantage and drawback of the theory.
What Is Virtue Ethics?
Contemporary virtue ethics is an updated version of a theory first proposed in ancient Greece. Today’s proponents acknowledge that it’s very difficult to set up a list of moral rules that are going to solve ethical dilemmas across cultural lines. Typically, they don’t go quite so far as the culturalists; they don’t believe that basic regulations of right and wrong are completely independent from one community to another. In practical terms, however, there’s agreement that the world is too diverse and changing to be controlled by lists of recommendations and prohibitions. So proponents of virtue suggest that we change the focus of our moral investigations. Instead of trying to form specific rules for everyone to follow—don’t bribe, don’t exploit the deceased on TV—they propose that we build virtuous character. The idea is that people who are good will do the good and right thing, regardless of the circumstances: whether they’re at home or abroad, whether they’re trying to win new clients or making a decision about what kind of images are appropriate for public TV.
In a vague sense, we all know what it means to have a virtuous character; we all know people who can be counted upon to do the right thing. Think of a business situation where true character shines through. A local TV station has seen advertising revenue plummet and layoffs have to be made. Who should go? Should Jim get to stay because his wife just had their first child? Should Jane get to stay because she’s fifty-seven and probably won’t be able to find another job? Should John—who’s a tireless worker and the station’s best film editor—be laid off because he was hired only two months ago? It’s a hard choice and there’s no way to know for sure what’s right. It is certain, however, that there are better and worse ways of handling the situation.
One strategy is to not think too much about it, to just know that two employees have to go, so you take the names that happen to come to mind, you send them an e-mail, and you instruct security to make sure they’re escorted from the building. Then you go hide in the bathroom until they’re gone. In other words, you weasel out. In the same situation, another person will draw up criteria for making the decision and will stand up and inform those who are being let go why the decision was made. The thoughts (complaints, regrets, excuses) of those being released will be honored and heard attentively, but the decision will stand. From the person in charge of deciding, there’ll be honesty, respect, and firmness. This is virtue. You can’t read it in a book, you can’t memorize principles, and you can’t just follow some precooked decision-making process. You have to have certain qualities as a person to do the right thing in a hard situation.
Virtue ethics is the idea that we can and should instill those qualities in people and then let them go out into the complex business world confident that they’ll face dilemmas well. What decisions will they make? What will they do when faced with questions about who should be laid off or, in another case, whether to hand over a bribe in a place where everyone is bribing? We don’t know. But we rely on their good character to be confident they’ll do right.
Under this conception, these are the primary tasks of ethics:
• Delineate what the virtues are.
• Provide experience using the virtues.
The experience is especially important because virtue isn’t so much a natural characteristic like height or hair color; it’s more of an acquired skill: something you need to work at, practice, and hone. Also, like many acquired skills, doing it—once a certain level of mastery has been reached—is rewarding or satisfying. Typically, a person driven by virtue has nurtured a moral instinct for acting in consonance with the virtues. Doing right feels right. Conversely, not acting in consonance with the virtues is discomforting; it leaves a bad taste in the mouth. At the risk of trivializing the subject, there’s a very limited comparison that can be made between learning virtue and learning more rudimentary activities like golf or dancing. When someone has acquired the skill, hitting a good shot or taking the right steps in perfect time feels good. Conversely, missing a putt or stepping on your partner’s foot leaves you consternated.
What Are the Virtues and Vices?
Every advocate of virtue ethics will present a constellation of virtues that they believe captures the essence of what needs to be acquired to be virtuous. Typically, there’ll also be a set of antivirtues or vices to be avoided to fill out the picture. Here’s a set of virtues overlapping with what most proponents will offer:
• Wisdom (both theoretical and practical)
• Fairness
• Courage
• Temperance
• Prudence
• Sincerity
• Civility
On the outer edges, here’s a common pair of vices to be avoided. Notice that what counts as a vice here isn’t synonymous with the common use of the word, which implies a weakness of the physical body manifested as the inability to resist drunkenness, drugs, and similar:
• Cowardice
• Insensibility
How Do the Virtues and Vices Work in a Business Environment?
Wisdom as a virtue is frequently divided into theoretical and practical variations. Theoretical wisdom is what you get reading books and hearing college lectures. It’s the acquired ability to concentrate and understand sentences like the one you’re reading now, even though it’s not very exciting and allows almost no cheap thrills—words like sex and drugs don’t come up much. Those possessing theoretical wisdom know the scholarly rules of the world in the abstract but not necessarily in practice. In the world of business, for example, someone may be able to explain the fine points of Immanuel Kant’s complicated and dense ethical ideas, but that doesn’t mean they’ll be able to apply the lessons when sitting in someone’s office in a foreign country.
Practical wisdom (sometimes called prudence) is the learned ability to take a deep breath and respond to situations thoughtfully. For example, everyone feels like exploding sometimes, especially at work after you’ve had too much coffee and you didn’t get the raise you wanted. After that, some guy in a meeting takes a cheap shot and jokes about how you didn’t win an overseas account because you didn’t bribe the right person. What do you do? Scream the guy’s head off? Talk about it quietly after the meeting? Let it pass like nothing happened? Practical wisdom doesn’t give an answer, but in the heat of the moment, it’s the virtue of making the decision coolly, of doing something you won’t regret later. Frequently, an association is set between practical wisdom and finding a spot between extremes. In this case, perhaps it would be excessive to go off right there in the meeting room (because the outburst would tend to confirm that you’re not real smart), but it might also be excessive to let the jab go as though nothing had happened (because the same guy may feel emboldened to keep poking at you). So practical wisdom would be the ability to navigate a middle, prudent, route—perhaps one leading to the decision to discuss the matter quietly but sternly after the meeting.
Fairness is the virtue of judging people’s acts dispassionately, evenhandedly, and from all points of view. When forming judgments about a potential client who seems to be asking for a bribe, the verdict is going to partially depend on where the client is. If he’s in the United States, that’s one thing; if he’s in a country where clients customarily get cash under the table, that’s another. No one is saying the first is wrong and the second right, but the different contexts need to be considered, and fairness is the ability to consider them, to make evenhanded judgments even in very different situations.
Courage is the virtue of moderate boldness. If you’re an action crime reporter, you won’t hide in a bush while pushing your cameraman out into the open to try to get some exciting footage. You won’t, in other words, be a coward. At the same time, you won’t be rash either, you’ll know that sometimes you need to take a risk to get a good story, but it doesn’t make a lot of sense to stand up and film from the middle of a gunfight.
Temperance is the virtue of self-control with respect to pleasure, especially the pleasures of the body and the senses. Curiously, Wallace Souza stands as an embodiment of this skill. As a major league drug dealer, he no doubt had constant access to good, cheap, feel-good substances. Even so, he managed to control his intake, not letting it interfere with his day job as a TV reporter, and his other day job as a legislator.
More generally in the workplace, temperance mixes well with the learned ability to delay gratification. For example, doing good work is frequently rewarded with a better job, but it’s hard to find someone who feels as though they get everything they deserve every time. Temperance enters here as the ability to bear down and keep trying. It’s also, on the other side, the ability to know when a larger change (perhaps looking for work at another company) may be necessary to get ahead.
Sincerity is the ability to reveal yourself to others with confidence that you’ll be respected. It fits between the extremes of frigidity and emoting. Souza or any TV reporter has to do more than just give cold facts; some human, emotional component must be added to the mix. On the other hand, no one’s going to watch a reporter who arrives at a crime scene, reports that he feels sad, and breaks down in tears. Similarly in international business negotiations, to establish good contact across cultures, there has to be some sharing of humanity. You need to reveal what kind of food you like or something similar to the people on the other side. You don’t want to go too far, though, and talk about how Japanese food reminds you of a childhood vomiting episode (especially when doing business in Tokyo).
Civility is the virtue of showing consideration for others without humiliating yourself. As a virtue it doesn’t mean eating with the right fork or remembering to say “thank you” to clients. Instead, it’s the disposition to show others that you take them seriously while also respecting yourself. This means establishing ground rules for behavior that are independent and neutral. In essence, the idea is, when having lunch with your boss, you don’t eat like you’re sitting in front of the TV in your family room; you respect her, and you expect the same from her. Civility is the virtue of habitually being and expressing yourself in a way that establishes your presence solidly without threatening or impinging on others.
Vices
On the outside of the virtues, there are vices. Just as the accomplishment of a virtue—acting in harmony with it—yields a sense of satisfaction and confidence that you’re living well, living a good life, so too the vices produce a sensation of unease. It’s not exactly a sting of conscience (like a child feels when caught stealing); it’s more a sense of weakness, deflation, and failure. Cowardice, for example, is a vice. It may save your job if you mess up and don’t confess to the problem being your fault; but for the person trained in virtue, the job will have lost its dignity. Insensibility is another vice. Had Souza understood that, he may have thought twice about those people’s dead bodies he rolled out for television. He may have thought of their living parents, their children. And even if he hadn’t, after he’d presented the images he would’ve felt that he’d lapsed, that he hadn’t done as well as he could.
How Do I Become Virtuous?
Virtues aren’t a list of actions you can write on the back of your hand and refer to; they’re ways of living, and the only route to becoming virtuous is to actually live those ways. Every society will have its own institutions for instilling virtue, and within societies different institutions will seem more apt for some than for others. In the United States, the kinds of groups that are sought out as instillers of virtue include the family, churches, schools, sports teams, Boy and Girl Scouts, volunteer and community organizations, the armed forces, AmeriCorps, and similar.
Companies play a role, too. The virtuous organization will be led by individuals who are virtuous, and it will reward workers—at least partially—based on their progress toward being good people. This kind of organization won’t rely on employee handbooks and compliance rules to dictate behavior; instead, it will devise strategies for nurturing the skills of a good life. They may include mentor programs, carefully calibrated increases in responsibility and independence for employees, and job performance assessments that not only measure numerical results but also try to guage an individual’s moral contributions to the organization’s undertaking.
Finally, when confronted with moral questions—“What kind of images should I broadcast on my TV report?” or “Should I hand money under the table?”—the answer won’t be yes or no. It’s never a yes or no; it’s always to do what my good character dictates.
An Advantage and Drawback of Virtue Ethics
The principal advantage of virtue ethics is its flexibility, the confidence that those who are virtuous will be equipped to manage unforeseeable moral dilemmas in unfamiliar circumstances. The principal drawback is the lack of specificity: the theory doesn’t allow clear, yes-or-no responses to specific problems like whether I should offer a bribe.
Key Takeaways
• Virtue ethics concentrates on forming good character and then trusting people to do the right thing. At the heart of ethics, the formation of good character replaces the defining of specific guidelines for action.
• A society’s institutions play a key role in instilling virtue.
• The basic virtues tend to stress moderation, the ability to avoid taking extreme action in the face of dilemmas.
• Virtue ethics grants flexibility insofar as those who are virtuous should manage any situation well.
Exercise \(1\)
1. Would you call Souza’s colorful professional life a profile of the virtue of courage? Why or why not?
2. How might the virtue of civility come forward in the case of international bribery, in the case that you’ve gone abroad in pursuit of a contract and the prospective client demands some cash under the table?
3. What are some societal institutions you’ve come in contact with that could be understood as teaching virtue? What virtue(s) do they instill, and how? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/04%3A_Theories_Responding_to_the_Challenge_of_Cultural_Relativism/4.04%3A_Virtue_Theory.txt |
Learning Objectives
1. Define discourse ethics.
2. Show how discourse ethics can function in a business context.
3. Note an advantage and drawbacks to the theory.
What Is Discourse Ethics?
Proponents of discourse ethics reverse the order in which we normally address ethical uncertainties. Instead of starting with one theory or another and then taking it out into the world to solve problems, they start with a problem and try to create a moral structure to solve it. Ethical solutions become ad hoc, custom generated to resolve specific conflicts. It doesn’t matter so much, therefore, that people come to an issue like bribery from divergent moral terrains because that difference is erased by the key element of discourse ethics: a foundational decision to cut away from old ideas and make new ones.
How Does Discourse Ethics Work?
When a dilemma is faced, those involved gather and try to talk it out. The discussion is constrained by two basic limits: conversation must be reasonable and civil, and the goal is a peaceful and consensual resolution. As long as these ideals control what we say, we can call the result ethically respectable.
Take the dilemma of international bribery: you’ve left your home office in New Jersey and gone to Somalia seeking to win construction business on a new airport. As the recent Transparency International Corruption Perception Index shows, “Corruption Perceptions Index 2009,” Transparency International, accessed May 12, 2011, www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table, you’re going to discover that it’s customary to pass some cash to a prospective client before he’ll be willing to do serious business. Company policy, however, prohibits bribes.
What do you do? If you’re playing by hometown, American rules, your responsibility to company policy and to broad honesty and fairness requires you to walk away. But if you’re playing Somali rules where greasing a palm seems fair and acceptable, your obligation to win contracts for the company that’s paying your salary requires you to pass some cash. Discourse ethics comes in here with this: instead of trying to impose one side’s convictions on the other, the effort will be to overcome the divide by constructing a new and encompassing moral framework through common agreement. American rules and Somali rules are both thrown out, and new ones get sought. Here are steps on the way:
1. Define the immediate stakeholders—that is, those who’re most affected by the dilemma and may be gathered to resolve it. In this case, they include you and your client. Since your responsibilities to the company are reported through your supervisor, she too could be included.
2. Establish a language for discussion. In the international world this is actually a real problem. Sensibilities must be respected, and if you’re in Somalia, just assuming that everyone will speak English might be a step backward. On the other hand, you probably don’t speak Somali. This step then becomes a rehearsal for the larger problem—just as you’re separated by moral codes, so too you’re separated by languages—and you’re going to have to find a solution. You may choose a third language, you may hire an interpreter, or maybe your client will be able to speak English. In any case, an agreement must be reached.
3. Establish the goal, which in discourse ethics is always the peaceful and consensual resolution to the dilemma.
4. Define the problem. Here, it’s that when cash passes from you to the client, you feel like you’re handing over an illegitimate bribe, but he feels like he’s receiving a typical and acceptable gift. This stage of the process would require fairly lengthy elaborations by all those involved of exactly what they understand their obligations and interests to be. Your supervisor would need to explain the company policy, why it exists and how she’s responsible for upholding it. Your client might point out that his salary is quite low, and the reason for that is simple: everyone accepts that his income will be supplemented by gifts. (Here, he might sound something like a waitress in New York City explaining to a foreign diner that her salary is absurdly small, but everyone expects there’ll be some tipping, and it’ll be more than two shiny quarters.) You, finally, explain how you’re being stretched between two obligations: the one to respect company policy and the other to do the job of winning contracts.
5. Propose solutions. Discourse ethics is open, a kind of ethical brainstorming: those involved offer solutions, modify each others’ proposals, and try to discern whether a common ground can be mapped. In this case, someone may propose that the prospective client offer substantial evidence that money is expected and customary for someone in his position in Somalia. If the evidence can be produced, if it shows that payments are nearly universal, and it shows about how much they normally are, then perhaps all parties can be satisfied. Your supervisor, seeing that the amount actually forms part of a normal salary and isn’t some extraordinary payment, may be able to reason that the money isn’t a bribe because it’s not doing what bribes typically do, which is afford an unfair advantage. In this case, if everyone’s paying, then no advantage will be had. It’s important to note here that the logic isn’t if everyone does it then it’s all right, because discourse ethics doesn’t generalize like that. All conversations and solutions are about getting agreement on this one case. So your supervisor feels like handing cash over isn’t a bribe any more than tipping a waitress is. Your client, having received the money, will obviously be satisfied. You, finally, will be free to fulfill your professional obligation to win the client without sacrificing your obligation to respect company policy and your obligation to yourself to work in a way that’s honest.
If this—or any—solution is reached, then discourse ethics will have done what it promised: open a way for concerned parties to reach agreements alleviating conflicts. Whatever the agreement is, it’s an ethically recommendable solution because the definition of what’s ethically recommendable is just agreements reached through discussion.
An Advantage and Drawbacks to Discourse Ethics
The main advantage of discourse ethics is that the search for solutions opens the door all the way. Everything’s on the table. That gives those involved just about the best hope possible for a resolution benefitting everyone joined in the discussion.
There are two main drawbacks to discourse ethics. The first is that everything’s on the table. If what’s morally acceptable can be as broad as anything a group agrees to, there’s the potential for ugly solutions. On the face of it, the international bribery resolution—hand some money over because it’s not really a bribe and it’s more like tipping a waiter—seems pretty harmless. But it doesn’t take much to see a slippery slope developing. If this kind of gifting is OK in Somalia where salaries are low, then why not in the United States too if it happens that a particular client has a low salary relative to others in that line of work? Or why not every client because, really, pay in that line of work is substandard? This can go on and on, and before you know it, the entire economy is corrupted. Obviously, that won’t necessarily happen, but it could, and this is one of the reasons so many insist that any serious attempt to do ethics must begin with some basic defining of inbounds and out-of-bounds, some dividing of right from wrong. Discourse ethics doesn’t do that.
The second drawback to discourse ethics is that for every ethical dilemma faced, you have to start over. Since the entire idea is to clear the deck and make a new solution, anyone facing a significant number of ethical dilemmas in their line of work is going to be constantly clearing the deck and beginning anew. Of course there may be some components of past discussions that could be carried forward—what you learned on the trip to Somalia may be helpful in Uzbekistan—but that doesn’t change the fact that the ethical recommendation to start from zero and talk problems out is going to lead to a lot of talking.
Key Takeaways
• Discourse ethics solves dilemmas by asking those involved to discuss the matter reasonably until they can find a consensual and peaceful solution.
• Discourse ethics allows tremendous latitude in the search for solutions to conflicts, but it risks allowing solutions that many would consider unethical.
Exercise \(1\)
1. A five-step process was discussed to chart the advance of discourse ethics. Summarize each of these steps in your own words.
2. Describe a business situation where discourse ethics might work well. Why might it succeed?
3. Describe a business situation where discourse ethics might not work well. Why might it fail? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/04%3A_Theories_Responding_to_the_Challenge_of_Cultural_Relativism/4.05%3A_Discourse_Ethics.txt |
Learning Objectives
1. Define the ethics of care.
2. Show how an ethics of care functions in a business context.
3. Note advantages and drawbacks to the theory.
The Rules of an Ethics of Care
Sometimes advocated under the titles of community ethics or feminist ethics, an ethics of care switches the focus of moral regulation from the individual to networks of social relationships. The basic question isn’t about yourself; it’s not “What should I do?” Instead, it’s always about a larger us: “What should be done to nurture the connections among those of us closest to each other?”
A quick example dilemma: There’s a flaming car wreck involving your sister and a Nobel Prize–winning medical scientist, and you have the strength to rescue only one of the two. Which should you save? A strict utilitarian—someone believing we should always act to bring the greatest good to the greatest number—will go for the scientist. Saving him will likely produce future medical breakthroughs in turn saving many others, which means the greater good will be served by dragging him out. But how many of us would actually do that? Wouldn’t you go for your own sister before some scientist you’ve never met? And wouldn’t most of the rest of us agree that we’d do the same thing? If the answer is yes, an ethics of care provides a way of understanding and justifying the impulse, which is, before anything else, to protect those bound to us.
There are three critical steps on the way to formalizing care as a coherent ethical orientation. Each is a shift away from traditional ethics.
1. At the center of attention, independent actors are replaced by a web of interrelated individuals. (Ethics is not about me and you; it’s about us.)
2. The impartial application of abstract principles is replaced by the maintenance and harmonizing of human relationships. (Ethics is less about the fair imposition of rules and more about crafting social integration.)
3. Tensions between the rights of individuals get replaced by conflicts of responsibility to others in established relationships. (Ethical tensions aren’t my rights versus yours; it’s me being torn between those I care for.)
In the international bribery example up to now, we’ve treated all those involved as anonymous individuals: it hasn’t mattered whether or how long they’ve known each other. It’s only important to know that there’s a supervisor X back at the US company headquarters, and there’s the person Y who’s gone abroad to win a contract, and there’s the prospective client Z expecting a bribe. That’s it. Maybe the three have never exchanged more than fifty words in a single conversation, or maybe they’re all cousins who meet for family blowouts every two months. We haven’t asked because it hasn’t mattered what their personal relationships may be. That will have to change, however, within an ethics of care because there are no anonymous, single individuals: everyone has a place—near or far, integral or accidental—within a social network. For that reason, all morality resembles the car wreck. It’s charged with human attachment, and because the ethics of care makes those attachments the center of deliberation, you have to know how people are related to each other before beginning to know how they should treat each other.
Turning this perspective toward the bribery example, the overseas client, let’s say, is an old and loyal client of the company, and also one who’s always gotten a little extra from one or another employee. About the company, it’s not an anonymous multinational but a medium-sized, extended-family concern. Brothers, uncles, nieces and nephews, and a hodgepodge of others all work there. For years, it can be added, this overseas contract has been vital to the company’s success. Now all this counts for something within an ethics of care. As opposed to the traditional idea that the best moral lessons show us how to coldly, impersonally, and impartially apply abstract rules, here we’re checking to see who’s involved, because the reason we have morality is to vitalize our human relationships.
An ethics geared to strengthen bonds isn’t necessarily easy to enact. Take a company like Oil-Dri, about which Forbes recounts,
Oil-Dri now makes about \$240 million a year in revenues. At the company’s 50th anniversary party, the CEO asked anyone related to anyone else at the organization to stand up. Of the company’s 700 or so employees, almost 500 rose. Klaus Kneale, “Is Nepotism So Bad?,” Forbes, June 20, 2009, accessed May 12, 2011, http://www.forbes.com/2009/06/19/ceo-executive-hiring-ceonewtork-leadership-nepotism.html.
This is obviously an organization where relationships matter and where management is accounting for human concerns and networks when hiring people. No doubt there’s a lot of camaraderie in this workplace, but imagine how difficult it must be to dole out promotions when everyone knows everyone else in that personal, almost familial way. Within a more traditional ethics, one of the first steps to making a promotion decision is to clear away all the personal stuff before evaluating each employee directly and simply assess his or her professional merits. Within an ethics of care, however, any promotion decision—more or less any decision at all, for that matter—is going to require the subtle, complex, and difficult balancing of many individual and highly emotional situations and circumstances.
Something similar happens within typical families. Most parents trot out the idea of treating all their children identically—they all get their first car at the same age and so on—but if a sibling has special problems at one stage of their development, they’ll normally get special treatment in the name of preserving the family unit. The other brothers and sisters probably complain, but if they’re old enough they understand that protecting those who are vulnerable is one of the first imperatives of caring for each other as a group. An ethics of care in essence takes that model from the family and extends it out into the world of business. Applying it to the promotion question, if there’s a member of Oil-Dri saddled by, let’s say, a difficulty with alcohol, then that might actually be a positive consideration within care-based thought. Promoting someone who has had problems and reinforcing their attempt to get past them may serve the general harmony of the entire group. As a result, someone who’s less qualified in purely professional terms may get the promotion in the name of caring for the social web.
How Might the Case of International Bribery Be Managed within an Ethics of Care?
Traditionally, ethics features questions about the competing rights of individuals. For example, when I offer a bribe, am I impinging on the right of another to compete on a level playing field for the same business? Starting from an ethics of care poses a different question: does giving a bribe reinforce or weaken the bonds of human relationships defining my place in the world? The answer, obviously, depends. If the company is Oil-Dri where everyone’s deeply connected, and it’s an old client, and a little gift of cash has always been slid under the table, then the maintenance of that network’s vitality and human health becomes a powerful argument in favor of continuing the practice.
Keeping the wheels turning isn’t the only solution, however. Discomfort with doing something that seems underhanded may lead the overseas representative to try a different way of keeping the contract going, one that’s based less on money under the table and more on aboveboard selling points. Quality of service as proven by work performed in previous years may offer a way to keep the business and personal link intact. There may be, in other words, a less controversial route to the same end of maintaining and enforcing existing relationships.
Alternatively, a different client, one not demanding a bribe, may be sought to purchase the company’s goods and services. Nothing in an ethics of care requires those participating to preserve every bond. Sometimes it happens in families that a member becomes so toxic and damaging to the rest that the connection needs to be severed in the name of maintaining the larger whole. The overseas bribery relationship may be one of those cases. It’s hard, of course, to break away, but there are other potential clients out in the world and going after them may, in the final analysis, do more for the social health of the core group than clinging to a problem at all costs.
Finally, enrolling in an ethics of care doesn’t mean going blind to what’s going on outside the circle of care. One fact from the larger world that should be taken account of comes from a recent article in the Washington Post about foreign business bribes: prosecutions of international bribery by the US government are picking up. Carrie Johnson, “U.S. Sends a Message by Stepping Up Crackdown on Foreign Business Bribes,” Washington Post, February 8, 2010, accessed May 12, 2011, www.washingtonpost.com/wp-dyn/content/article/2010/02/07/AR2010020702506.html. Ethical concerns should normally be distinguished from legal considerations, but there’s no doubt that few events interrupt human relationships like a jail term. Cutting the bribery relationship, therefore, may be necessary regardless of how important the particular client and business are for the larger whole.
Conclusion. The activation of an ethics of care may justify continuing to pay money under the table. Or it may lead toward a less controversial way of maintaining the business relationship. Or it may cause a break between the company offering services and the overseas client demanding a bribe. There’s no way to know for sure which path will be the right one, but in every case the choice will be made in the name of preserving and nurturing the human relationships surrounding the decision.
Advantages and Drawbacks of an Ethics of Care
The advantages of a care-based ethics include the following:
• It can cohere with what we actually do and think we ought to do, at least in cases like the car accident cited at this section’s beginning. In a certain sense, it corresponds with our natural instincts to act in favor of and protect those under our care and those involved in our lives.
• It humanizes ethics by centering thought on real people instead of cold rules. Presumably, everyone agrees that ethics is ultimately about people: unlike the hard sciences, the end results of morality are tallied in human lives. To the extent that’s right, an emphasis on care seems well suited to the general practice of ethics.
• It allows us to focus our energy and concern on those who are closest to us. Everyone knows that there’s injustice in the world, just as we all know we can’t solve every problem. The ethics of care allows us to focus our energy naturally on the most immediate human needs.
The main disadvantage of an ethics of care is that it threatens to devolve into tribalism: There’s my group, and I take care of them. As for all the rest of you, you’re in your groups and in charge of yourselves. This isn’t every man for himself, but it comes close to every social group for itself.
Key Takeaways
• An ethics of care makes the nurturing of our immediate communities and the protecting of those closest to us the highest moral obligation.
• In business, an ethics of care asks us to review decisions not in terms of hard rules but in terms of how they will affect the people with whom we share our lives.
• An ethics of care humanizes moral decisions, but it threatens tribalism.
Exercise \(1\)
1. What are the three major steps an ethics of care takes away from most traditional theories? Can you put each one in your own words?
2. An ethics of care is frequently compared to the morality guiding a family. Can you think of another comparison that encapsulates how this ethics works?
3. Imagine that you had two parents and a sister working for Oil-Dri in the United States. The overseas client you’ve been sent to do business with is a half brother from your father’s first marriage. He demands a bribe. How could the ethics of care be used to justify accepting or refusing? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/04%3A_Theories_Responding_to_the_Challenge_of_Cultural_Relativism/4.06%3A_Ethics_of_Care.txt |
The following tables summarize the theories considered in this textbook. The first includes the traditional theories and the second encapsulates the contemporary theories built to respond to cultural relativism.
Table \(1\): The Traditional Theories
Name Guidance for ethical action Focus of our efforts Typical questions asked in the effort to fulfill obligations Conception of the person implied by the theory Strengths and weaknesses Type of theory
Duty Learn the basic duties to ourselves and others, and obey them. The duties.
• To whom do I have obligations?
• What are the obligations?
• How do the obligations weigh against each other?
We are rational actors. Gives clear guidance in many situations but is inflexible in the face of special cases. Nonconsequentialist
Fairness Treat people identically unless they differ in ways relevant to the situation. (Treat equals equally and unequals unequally.) Resist prejudice and personal feelings. Does everyone get an equal chance? (If they don’t, how are the differences justified?) We are rational actors. Promises egalitarianism, but can be difficult to implement in complex reality. Nonconsequentialist
Kant Learn the basic duties to ourselves and others, and obey them. The categorical imperative in two articulations: actions must be universalizable and treat others as ends and never as means.
• Is the act I’m considering universalizable?
• Am I being careful not to treat others as means to an end?
We are rational actors. Gives clear guidance in many situations but is inflexible, especially in the face of special cases. Nonconsequentialist
Rights theory Maximize freedom. Learn the individual’s basic rights, live them, and respect others’ right to live them. Does doing what I want impinge on the basic freedoms of others? We are distinguished by the possession of dignity. Allows individuality, but does little to resolve conflicts between individuals. Nonconsequentialist
Egoism Increase my well-being and happiness. Learn about my desires and welfare, and serve them What makes me happy over the long term? How can I get that? We are driven toward pleasure and away from pain. Good for me in the short term, but might not help us live together as a society. Consequentialist
Altruism Increase the well-being and happiness of others. Learn about others’ desires and welfare, and serve them. What makes others happy over the long term? How can I help them get that? We are driven toward pleasure and away from pain. Others benefit, but it may be difficult to justify devaluing yourself. Consequentialist
Utilitarianism Increase the well-being and happiness of everyone collectively. Learn about the desires and welfare of everyone, understood as an aggregate, and serve them. What brings the greatest happiness and good to the greatest number over the long term? How can I help us get that? We are driven toward pleasure and away from pain. The general welfare is served, but injustices at the individual level may persist. Consequentialist
Table \(2\): The Contemporary Theories Responding to Cultural Relativism
Guidance for ethical action Focus of our efforts Typical questions asked in the effort to fulfill obligations Strengths and weaknesses Reaction to cultural relativism
Eternal return of the same Be myself. Think through the eternal return. Would I do this if it had to be repeated in the same life, which recurred forever? Maximizes individual authenticity but provides no specific recommendations for action. Abandons morality altogether.
Cultural ethics Follow local customs and practices. Learn local customs and practices. What do the locals do? Helps you fit in but allows little hope for ethical improvement. Accepts the proposal that moral rules are just a particular community’s beliefs.
Virtue ethics Develop good moral character. Learn and practice the virtues. Am I acting with integrity and in accordance with values learned? Allows flexibility but provides little specific guidance. Tries to protect against cultural relativism by developing an adoptable but consistently moral character.
Discourse ethics Produce solutions to moral dilemmas. Talk it out: use rational conversation to reach a peaceful, consensual agreement. What do you think? How about this possibility? Provides a broad range of possible solutions but every conflict must be addressed from scratch. Replaces a culture’s moral rules with the attempt to fabricate new rules to function in specific situations.
Ethics of care Nurture and protect immediate relationships. Respond to the needs of those nearest us. Which solution preserves healthy and harmonious relationships among those involved? Humanizes morality but risks tribalism. Replaces a culture’s moral rules with loyalty to those whose lives touch our own. | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/04%3A_Theories_Responding_to_the_Challenge_of_Cultural_Relativism/4.07%3A_The_Cheat_Sheet-_Rules_of_Thumb_in_Applied_Ethics.txt |
I Wouldn't Change a Thing
Source: Photo courtesy of Patrick Hawks, www.flickr.com/photos/pathawks/796254651/.
Tamica Tanksley graduated from Temple University in Philadelphia in 2000. About a decade later she worked her way into an important role in the office of Pennsylvania State Senator Vincent Hughes: she’s codirector of his community affairs outreach and efforts. Though not a celebrity or mightily important in politics, what she’s done with her life up to now earned her a brief write-up and a chance to answer a few interview questions in Temple’s Internet Alumni magazine. “Tamica Tanksley, SCT ’00,” Temple University, accessed May 12, 2011, www.myowlspace.com/s/705/index.aspx?sid=705&gid=1&pgid=1021&cid=1612&ecid= 1612&ciid=3725&crid=0.
She describes her job responsibilities as linking the senator with “community leaders, educators, religious organizations, constituents and various institutions within the public and private sector.” It all comes naturally to her. As she puts it, “I didn’t choose politics, politics chose me. And if I had to do it all over again, I wouldn’t change a thing.…Working in the government sector where my daily responsibilities afford me the opportunity to empower and inspire everyday people is a career that ignites my passion for people.”
It’s not just heavy, public service trudging, though; Tanksley also finds the job “fun” because it allows her “creative juices to flow into a sea of possibilities,” and in a different part of the interview she calls the work, in a sense, victorious: “As a citizen and voter, I’ve learned that this game of life is not won by standing on the sidelines. In order to provoke change and improve the quality of life for everyone, we must get into the game because victories are won on the field.”
How’d she get the job? The way a lot of people start off in politics, by serving in that same office as a volunteer worker.
Finally, since it’s a Temple University website, the interviewer tries to get in a plug for the school and succeeds with this memory Tanksley produces of Dr. Jean Brody’s public relations course and the prof’s infamous (at least on the Temple campus) red pen: “While I was often saddened by my white paper being flooded by red pen marks, I quickly learned that Dr. Brody and her red pen refined the best in me. With each passing assignment, the red marks lessened and my knowledge and experience increased. Moreover, it was the red that encouraged me to do my best work, which has ultimately contributed to the dedicated worker I am today.”
Exercise \(1\)
1. Tanksley reports about her young life up to this point that “if I had to do it all over again, I wouldn’t change a thing.” Can you use this as a point of departure for
• defining Nietzsche’s eternal return and showing how it works?
• characterizing Tanksley’s professional life as one fit for approval by Nietzsche’s eternal return?
2. The values guiding Wallace Souza’s work as a news reporter in remote Brazil—especially the kinds of images judged appropriate for TV there—are quite different from those guiding TV reporting in the United States. Why does Nietzsche believe this kind of cultural clash is a reason to subscribe to the eternal return and simultaneously abandon traditional ethical theories, which attempt to pertain universally?
3. Tanksley reports about her young life up to this point that “working in the government sector where my daily responsibilities afford me the opportunity to empower and inspire everyday people is a career that ignites my passion for people.” How might an advocate of the eternal return respond to this sentiment? Explain.
4. Whose life seems more in tune with how you imagine yourself living the eternal return, Souza’s or Tanksley’s? Why?
5. For virtue ethics, knowing what to do with your life—responding to its problems, choosing goals to reach for—isn’t something you can just figure out no matter how intelligent you may be or how many ethics classes you’ve taken. To succeed, you also need a good society, one that does two things:
• Teaches the virtues through its institutions
• Provides a way to practice using the virtues
How could Dr. Jean Brody be considered a teacher of virtue? What particular virtues did she teach Tanksley, and how did she provide a way to practice using them?
Mordidas
Source: Photo courtesy of Myki Roventine, http://www.flickr.com/photos/myklroventine/847530903/.
In Mexico City, police salaries are extremely low. They live decently enough, though, by adding bribes (mordidas in Spanish) to their wages. During a typical week they pull in bribe money that more or less equals their monthly salary. All the locals know how it works, especially when it comes to the most avid collectors, the traffic cops. In the standard procedure, the officer pulls a car over, takes out his codebook, walks up, and hands it to the driver. Ostensibly, he’s allowing confirmation that the law actually prohibits whatever was done. This is what actually happens: the driver slips about fifty pesos (a little under five dollars) into the book, closes it, hands it back, and is free to go. Business Ethics Workshop video, accessed May 12, 2011, businessethicsworkshop.com/Chapter_4/Mordida%20in%20the% 20booklet.html. The practice is so routine that frequently the procedure is abbreviated and participants don’t even bother trying to hide the payoff or going through the codebook pantomime. They may approach the officer’s patrol car and directly drop the money onto the guy’s lap. Business Ethics Workshop video, accessed May 12, 2011, businessethicsworkshop.com/Chapter_4/How_to_purchase_a_police_ officer.html. Or they may stay in their own car and just hand cash out to be directly pocketed.Business Ethics Workshop video, accessed May 12, 2011, businessethicsworkshop.com/Chapter_4/Quick_mordida.html. Regardless, the transaction is smooth and efficient.
Despite the bribery’s efficiency and its penetration to society’s core, not everyone in Mexico City is happy with the constant mordidas. According to a story in the city’s largest circulation daily, a mayor in one of the suburbs decided to take a lonely stand against the informal police action. Since all the police are in on it, he couldn’t resort to an Untouchables-styled internal affairs operation. And since all the citizens considered the payoffs perfectly normal, he couldn’t appeal to them for help either. Really, he was left with only one choice. To interrupt the habit, he made traffic tickets illegal. His suburb became a free driving zone where anybody could do whatever they wanted in their car and the police couldn’t respond. A lot happened after that, but there’s no doubt that the payoffs stopped. Alejandro Almazán, “Fin de la mordida,” El Universal, November 16, 2003, accessed May 12, 2011, www2.eluniversal.com.mx/pls/impreso/noticia.html?id_nota= 54910&tabla=ciudad.
Exercise \(2\)
1. About the bribery in Mexico City, not only is it the way things have been done as long as anyone can remember, but the process actually makes a lot of sense; it’s even very economically efficient because the middlemen are being cut out. Instead of having to pay an administrative staff to process traffic tickets, then accept deposits into the city’s account, and then redistribute the money back out as part of police salaries, here the money goes straight into the officer’s pocket.
• What is cultural relativism, and how does the vision of ethics associated with it diverge from the traditional ethical theories?
• The Mexico City process of getting and paying off a traffic ticket is different from the US process. What values and advantages can be associated with the process in Mexico City? How can it be justified in ethical terms?
• The Mexico City process of getting and paying off a traffic ticket is different from the US process. What values and advantages can be associated with the process in the United States? How can it be justified in ethical terms?
• The Mexico City process of getting and paying off a traffic ticket is different from the US process. How can that difference be converted into an argument in favor of the idea that cultural relativism is the right way to look at things? Does the argument convince you? Why or why not?
• Your company, FedEx, has sent you to Mexico to open a branch in Mexico City. You’ll be there for three months, with all expenses paid. Can you make the case with a culturalist ethics that FedEx should reimburse not only your car rental and gas but also the two mordidas you had to pay even though you obviously don’t have any receipts?
• After you return from your successful overseas experience, FedEx assigns you to train a set of recruits to go to Mexico and open more branch offices. When you to talk about the police and mordidas, would you counsel a culturalist approach, or would you advise them to go by the book (as that phrase is understood in the United States)? How would you justify your decision?
• For owners of office buildings in Mexico City, FedEx is a great client. They pay their rent every month and they’re probably willing to negotiate an amount in dollars, which is extremely attractive because the Mexican peso is prone to the occasional and steep devaluation. As a result, if you’re opening up a new FedEx office, you’re going to have building owners lining up, trying to rent you space. Does a decision to play by local rules and pay mordidas to cops also allow you to play by local real estate rules, which allow you to take a generous cash gift in exchange for renting in one building instead of the place across the street? Why or why not?
• You are sent to Mexico City to rent office space. You find two equally good spaces only distinguished by the fact that one owner offers a larger bribe than the other. No one’s watching, no one will ever know, you can do whatever you want. What do you do? Why?
2. Think of yourself as a virtue ethicist.
• Very quickly, what are some of the virtues you personally attempt to live by, and what social institutions played a role in shaping your character?
• If you were sent to Mexico on a work assignment and found yourself in the situation typically faced by local drivers after being caught driving a bit fast, how would you handle the situation? Which virtues might come into play?
• Most advocates of virtue ethics believe companies—like other organizations including schools, churches, and community associations—play a role in instilling virtue. If you were training FedEx recruits destined to open branch offices in Mexico City and you wanted to prepare them for the ethical challenges of bribery, what virtues would you seek to instill in them? Can you think of any life experiences that some recruits may have had that may have formed their character to respond well to the situation on the Mexican streets?
• The mayor in suburban Mexico City who decided to cancel traffic tickets was, in fact, fighting against what he saw as corruption. Most advocates of virtue ethics believe government organizations play a role in instilling virtue in its citizens. Could this action be considered part of that effort? What virtues might it instill? How would it help people become better practitioners of those virtues?
3. The video Mordida in the Booklet (businessethicsworkshop.com/Chapter_4/C4.html) shows a motorcycle officer getting paid off. One curious aspect is how long and intense the discussion stretches between the officer and the pulled-over driver. What they’re doing is negotiating the amount. The fifty peso price tag is a good average, but the number can drop or climb depending on the give and take. Business Ethics Workshop video, accessed May 12, 2011, businessethicsworkshop.com/Chapter_4/Mordida%20in%20the% 20booklet.html.
• What is the five-step process of discourse ethics? How could this bribery negotiation be understood within it?
• According to Transparency International’s Corruption Perception Index, Mexico is a place where people doing business make many informal agreements involving bribery, kickbacks, insider dealing, and all sorts of similar practices. Except for the fact that those involved are wearing suits, most of these scenes resemble the one between the motorcycle police officer and the driver: people talk for a while, come to a mutually satisfying, peaceful conclusion, and some money changes hands. Do you see this as an indictment of discourse ethics, a justification of the approach, or something else? Justify.
4. In the newspaper article about the Mexico City suburb where the Mayor decided to ban traffic tickets, the reporter interviewed a police officer described as “an old transit cop whose juicy bribes had helped buy his gold necklaces and bracelets.” This was the old cop’s reaction to the situation (translated from Spanish): “I got my buddies together and I told them, ‘This sucks, now what’re we going to do for money?’”
An ethics of care shifts the focus of moral thought away from the fair imposition of rules and toward the maintenance of immediate personal relationships. Ethics isn’t about treating everyone equally so much as it is about keeping companions together.
• Listening to this officer, who do you suppose exists within his web of social responsibility?
• Assuming this officer practiced the ethics of care, would he treat these two drivers differently after pulling them over: his nephew and some out-of-towner he’s never seen before? Why might he (not) treat them differently? Are there circumstances under which he’d actually demand more money from the nephew? What could those be?
• According to the newspaper article, in the first two months of ticketless existence in the suburb, about two hundred people were struck by moving vehicles, and twenty were killed. From the perspective of the ethics of care, can these numbers be used to form an argument against this policy and in favor of a return to the previous, corrupted reality?
Money for Nothing
Source: Photo courtesy of Richard Riley, http://www.flickr.com/photos/rileyroxx/2969244149/.
In his blog thezspot, author Z raises two questions about people receiving unemployment paychecks. Both are laced with suspicion of fraud. First, people who are collecting unemployment checks are required to show they’re at least trying to get a job, but Z writes that some are “showing up for interviews in jeans and t-shirts.” Then he asks, “Do these people really want the job, or are they just showing up to say that they are actively seeking work? ”Business Ethics Workshop, accessed May 12, 2011, businessethicsworkshop.com/Chapter_4/Unemployment_fraud.html.
He goes from there to a second critical point. “Some people,” Z says, “are collecting unemployment checks even though they’re actually working.” What they do is turn in their unemployment form listing the days they worked, and those are deducted from the check they receive. That sounds OK in the abstract, but, he adds, “The problem is that these people who are ‘on call’ are not taking shifts that are offered to them. Those shifts don’t get deducted from their unemployment. So, while there are people who are actually unemployed, struggling and looking to find work, there are Union employees sitting at home deciding when they do and don’t want to come in. And collecting unemployment.”
From the posting’s response section, here are two contributions:
1. It’s not easy for me to swallow that my taxes are supporting people who could be working.
2. I have a question. I live in Wisconsin and I know of somebody who is collecting unemployment but is not actually going to any job interviews or is even applying for jobs. Is this illegal? If so, how can I report this without them knowing?
Exercise \(3\)
1. If you were using the eternal return to chart your way through life, would you have any problem “sitting at home deciding when you do and don’t want to come in while collecting unemployment”? If you’re all right with that, how would you respond to the complaint from the response section that someone is paying taxes to support your lifestyle?
2. Thinking about the people showing up for job interviews in jeans and t-shirts, what might be lacking in their character according to a virtue ethicist? If the government is one of those institutions proponents of virtue look to for the instillation of good character, what might the government do in this situation in the name of encouraging virtue?
3. The second cited response to Z is a question about how an unemployment cheat can be reported “without them knowing.”
• About this silent reporting, why is this not what a proponent of discourse ethics would recommend?
• How could the five-step process of discourse ethics be applied to the situation? Would the guy complaining about paying taxes be included in the discussion? What kind of proposals might be voiced to rectify the situation?
4. Starting from the ethics of care, is there a situation you could imagine that would justify the actions of workers who take some shifts but decline others, and collect unemployment for those declined hours?
A Single Parent in the Army
Source: Photo courtesy of US Army Africa, http://www.flickr.com/photos/usarmyafrica/4034104565/.
The post of cook in the mess hall is probably one of the Army’s least dangerous assignments, the closest you get to actual battle is a food fight, but it’s still a military job where you go and do what your orders command. For Specialist Alexis Hutchinson, a twenty-one-year-old Army cook, that meant catching a flight to Afghanistan. She missed hers, though, intentionally. She regretted abandoning her unit, but felt she had no choice. The single mother of a ten-month-old, she says she couldn’t find anyone to care for her child during the absence; the only potential help, her mother, was already overwhelmed by caring for three other relatives with health problems. Hutchinson’s fear, according to her lawyer, was that if she showed up at the airport, the Army “would send her to Afghanistan and put her son with child protective services.”
For its part, a military spokesman says, “the Army would not deploy a single parent who had nobody to care for a child.”
The situation is under review, but for the present, just like anyone else who refuses deployment, she’s under military arrest on her base in Georgia. “Mother Refuses Deployment,” New York Times, November 16, 2009, accessed May 12, 2011, http://www.nytimes.com/2009/11/17/us/17soldier.html.
Exercise \(4\)
1. Virtue ethics
• The military is cited by virtue ethicists as a potential character-building institution, one of the places a society molds a good citizenry. What are some of the virtues the military could be expected to instill? How are those reflected in this situation?
• Families are a cited source of virtue. What values should we expect family life to instill? How are those virtues reflected in this situation?
• Is there any way to bring the military virtues and the family virtues together for Hutchinson? If so, what might it be? If not, why not and what should she do?
2. Proponents of discourse ethics walk through a five-step process on the way to reaching a negotiated settlement to moral conflicts. What might the five steps look like here?
3. One of the objections to discourse ethics is that it can set up a slippery slope—that is, the people involved can form a solution that bends the rules a little bit, and next someone else wants a little flexibility too, and then someone wants a little more, and before long, the rules have completely disappeared and everyone’s doing whatever they want. Could you sketch out how this process could happen here, with the end result being the Army more or less losing the values at the core of its existence?
4. Ethics of care
• One of the key elements composing an ethics of care and distinguishing it from traditional ethical theories is this: At the center of attention, independent actors are replaced by a web of interrelated individuals. Ethics, in other words, isn’t about me and you, it’s about us. In Hutchinson’s case, she finds herself in the midst of at least two networks of “us,” two communities of people to whom she owes an allegiance and care. Describe these communities and the links binding them.
• Another of the key elements composing an ethics of care and distinguishing it from traditional ethical theories is this: The impartial application of abstract principles is replaced by the maintenance and harmonizing of human relationships. Ethics, in other words, is less about the fair imposition of rules and more about crafting social integration. Can you find an example of this conflict between an ethics of rules on one side, and an ethics of relationships on the other, in Hutchinson’s situation?
• Another of the key elements composing an ethics of care and distinguishing it from traditional ethical theories is this: Tensions between the rights of individuals get replaced by conflicts of responsibility to others in established relationships. Ethical tensions, in other words, aren’t my rights versus yours, it’s me torn between those I care for. In the case of Hutchinson, how is she torn?
• In general, do you believe there’s a place for an ethics of care in the military? If so, where? If not, why not? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/04%3A_Theories_Responding_to_the_Challenge_of_Cultural_Relativism/4.08%3A_Case_Studies.txt |
Chapter 5 examines some ethical decisions facing employees. It considers the values that underlie and guide choices about the kind of work you choose to pursue.
05: Employee's Ethics- What's the Right Job for Me
Learning Objectives
1. Delineate ethical dilemmas and considerations in job seeking.
2. Discuss how values guide the search for a job.
3. Define job sequencing.
What Kind of Work Is Out There?
A question posed on a web discussion board: What Is Your Nightmare Job? Here are some answers:
• Lung gunner (in a poultry processing plant: ram a nozzle down the chopped neck of a chicken and suck out the lungs)
• Roofer (Miami, summertime)
• Urinalysis monitor (watch guys pee for eight hours, making sure no one’s switching their own for some friend’s who hasn’t been using drugs)
• Toll booth operator (apparently evil drivers heat quarters with cigarette lighters and drop them into the hands of unsuspecting operators) Michael Froomkin, “What Is Your Nightmare Job?,” Discourse.net, July 19, 2007, accessed May 16, 2011, http://www.discourse.net/archives/2007/07/what_is_your_nightmare_job.html.
That last part about hot coins may be urban legend, but no matter what, there are jobs on the list that are going to make you cringe.
The Wall Street Journal has a similar list, but theirs includes both a top and bottom twenty—the best and worst jobs you can try to get or struggle to avoid. Sarah E. Needleman, “Doing the Math to Find the Good Jobs,” Wall Street Journal, January 6, 2009, accessed May 16, 2011, http://online.wsj.com/article/SB123119236117055127.html. Here are a few from one group:
• Child-care worker
• Lumberjack
• Butcher
• Seaman
• Nuclear decontamination tech
• Nurse
• Firefighter
And a few from the other group:
• Actuary
• Parole officer
• Accountant
• Medical laboratory technician
• Paralegal assistant
• Meteorologist
• Historian
Can you tell which jobs belong in the twenty best and which are among the twenty worst? You might have a fix on the answer, but probably there’s one or two on each list that don’t seem to fit. That’s because once you get away from the extremes—the horribly bad and enviously good jobs—it’s difficult to define exactly what counts as good work.
Let’s take a look at two jobs: child-care worker and actuary. It’s probably true that no one really likes changing diapers at the day care center, and certainly it’s smellier and dirtier than being an actuary, which is a statistical job. Actuaries take a calculator and reams of data and try to figure out how old people are likely to be when they die. This is important information for companies selling life insurance since they’ve got to make sure their clients live long enough—and pay long enough—to more than cover the lump sum that gets doled out at the end. Now there’s a fair amount of money at stake here, and that’s why good actuaries get paid big money. The money is one reason being an actuary gets ranked as one of the best jobs by the Wall Street Journal. So the actuary advantages are the money, it’s not stinky work, and also it’s worth noting that there’s not much stress since no one will know for sure whether your calculations are right or wrong for decades. Add it all up and you’ve got a potentially desirable job and career path, the kind you may want to put at the center of your working life.
Still, is it really better than a bottom-twenty job as a day care worker? If you do go the day care route, it’s true that you’ve got to wash your hands constantly, but the rest of the day, being with excited children, helping them take their first steps, recite the alphabet, and learn how to play with one another, that must be worth something; there must be a human, emotional reward in it. Undeniably, when you punch out from the day care center on Friday night you won’t have as much money to spend as your friend who’s charting future death rates, but it’s also true that when you come back on Monday you’ll be engaged with young lives instead of death. You’ll be human for the day instead of a calculator.
On the other hand, no one likes poop under the fingernails. It’s hard to get away from that.
Finally, what’s really curious about that first list taken from the Internet discussion board is that for almost all of them, there’s some lone voice speaking up in favor in the comments part of the web page. A toll booth operator, for example, wrote in to say that he likes his job because there’s no boss staring over his shoulder. And roads don’t go out of business, so he doesn’t have to worry too much about corporate downsizing or economic recessions. Nearly every job, it seems, looks OK to someone. Even in the worlds of lung gunners and urinalysis monitors, there are people who are decently happy with what they’re doing.
Why Is a Career Decision Ethical Instead of Just a Personal Decision about Jobs?
Normally we think of ethics as providing guidelines for how to treat other people—don’t steal, don’t lie. But ethics is also about how we treat ourselves and the responsibilities we have to ourselves. One of the deepest of the responsibilities is making thoughtful and independent decisions about what’s worth doing and what isn’t. Narrowing this to economic reality, the most tangible choice you’re going to have to make is where am I going to go to work when I wake up in the morning? This decision—choosing a job and a career path—is about value. Every time the alarm goes off, you affirm what definitely matters in your life and what’s really not so important.
These value judgments are rehearsed in comparing the so-called bottom-twenty job in the day care center with the so-called top-twenty job of an actuary. There are big advantages to being an actuary: money and relatively fixed hours (no parents get stuck in traffic and leave you with a screeching three-year-old until 8:00 p.m.). But day care also has advantages: you work in a life-affirming profession while reaping the human reward of helping children learn.
It’s true that on paper being an actuary probably looks better. But life doesn’t happen on paper. That’s why, every day, people make the decision to go work at the day care center, despite everything. Or to be a teacher at an inner-city junior high school. Or to be a lumberjack because the opportunity to work outdoors outweighs the sore muscles. The possibilities are nearly endless.
In the end, you’re the only one who can decide what to do when the alarm goes off, and you have an ethical responsibility to yourself to make the best decision you can.
Seven Values for Ranking Jobs
To start thinking about jobs in terms of the values they respond to, these questions are pivotal. For me, how important is it that my work
1. is meaningful,
2. allows leisure time,
3. accumulates money,
4. bestows power,
5. radiates prestige,
6. is comfortable,
7. provides security?
The question about meaningful work is the hardest to cleanly answer. Even defining exactly what counts as “meaningful” isn’t easy. Definitely, it’s work that holds significance for you or the larger community apart from how much you’re paid, how big your office is, how long your vacations stretch. Still, it’s difficult to pin down exactly what counts as a meaningful job. Unlike money, which you can just add up, meaning is more like a color: hard to describe, changes a bit depending on the light, and people tend to have their own palettes of good and bad.
On her blog, Kendra Kinnison writes that she “believes her purpose in life is to use her ability to discover connections and present them in an innovative way to support the creation and building of healthy businesses and to inspire others to accept Jesus Christ and to discover and utilize their gifts.” About Kendra, accessed May 16, 2011, businessethicsworkshop.com/Chapter_5/Kinnison_bio.html.
She’s got it down. There’s nothing about salary or how many employees she has working underneath her. She does want to be in business; it’s not like her religion has led her off to be a missionary. But at the same time she wants to work on her terms and within her priorities. Probably, there are career slots where she wouldn’t fit too well (imagine her trying to help others and spread her faith while working at a used car dealership), but maybe starting up a local day care center would suit her ideals. True, the Wall Street Journal tells us that’s a bad job, but it doesn’t sound like it would be a bad one for her.
Look at the Greenpeace recruitment page: http://greenpeace.org/international/about/jobs. Their job openings read like anti-ads, like they’re trying to discourage your application. There are some uplifting parts about “challenging work,” but nothing about the potential for huge, year-end bonuses, or rapid advancement, or generous health insurance, or comfortable working conditions. In all those terms, working for Greenpeace sounds pretty bleak. Which is part of the reason it’s so clear that this is a job for people who want meaning in their professional lives, a purpose separate from their own comfort, and one involving the environment.
Not all meaningful work has to be based on faith or tied to internationally known advocacy organizations. Chances are there’s a woman not too far from where you live who’s in the music business at the grassroots level: she offers piano lessons. Knock on her door and ask why she does it year after year; she may say she believes in music, its beauty, and its contribution to what she considers a full life. Your college athletic director might say something similar about sports. Or go to the nearest farmer’s market—you won’t find a lot of money changing hands; it’s definitely not big business, but you’ll probably run into someone eager to discuss the virtues of organic food in terms that sound more like a crusade than a menu choice.
Actually, organic food is big business. Beyond seeds in the fields and the scattered crates of the farmers’ market, there’s a growing, and growingly profitable business in the massification of the organic. Anyone walking through the local Whole Foods will see a lot of the color green. What won’t be seen—but what’s definitely up above—is an impressive corporate structure with big-salary managers making million-dollar stocking decisions every day. As far as money goes, they’re doing well for themselves—like any multibillion-dollar corporation, Whole Foods pays its leading executives big money. Hannah Clark, “Whole Foods: Spinning CEO Pay,” accessed May 16, 2011, http://www.forbes.com/2006/04/20/john-mackey-pay_cx_hc_06ceo_0420wholefoods.html. But hunched over a desk and tapping on a keypad, hasn’t their work been bleached of the meaning and devotion that abides with the vegan wearing dirty overalls and trying to sell strawberries in an empty parking lot Saturday mornings? Maybe. Or maybe not. Meaningful work doesn’t require that the only jobs you’ll accept are low paying.
More jobs and kinds of work could be added here, but whatever you believe in, you should be able to find some employment that lets you approach it. As for how close you can get to truly meaningful work, that will probably depend to some extent on trade-offs, on how much you’re willing to give up in terms of leisure time, job security, and other comforts. Regardless, the real key is that meaningful work sets a specific purpose before everything else. With respect to lining up a career path, you don’t start with a list of jobs and then find one that suits your interests; it’s the opposite: you start with your deep interest and then find a job that lets you pursue it.
Finally, two cautionary points: While it’s true that people devoted to meaningful work frequently sacrifice money, leisure time, and job security, the logic doesn’t work the other way. Most of the time, low pay, short vacations, and a constant threat of unemployment don’t mean you’ve chosen a noble career; they just mean you’ve got a crappy job.
And on the other side, there are the holy grails out there. Probably, some higher-ups at Whole Foods got into the line of work because they find the promotion of organic food meaningful, and they ended up with enviable salaries as well (in other words, they’re in it for the organic cause more than the money, but they’re happy to get the money). In a different direction, Michael Jordan loved basketball and also ended up getting paid handsomely to play. The photographer Annie Leibovitz loves and is dedicated to photography, but she’s not making many sacrifices to do it: traveling to exotic places, living well, meeting interesting people. Former vice president Al Gore believes in saving the planet as much as any sweating deckhand on the Greenpeace boat; the difference is he wrote a book about it that sold millions of copies and made him millions of dollars.
Conclusion about meaningful work: dedicating your professional life to a cause or activity that you believe in doesn’t mean low wages and long hours. A lot of times it does, but that’s not the point.
Another question shaping job seeking is leisure time. How important is it? In a sense, this is the mirror image of meaningful work. If you believe in something like promoting organic food, playing basketball, taking pictures, saving the planet, or even watching game shows on TV, it’s perfectly reasonable to find a job in some other field that provides the income you need in the fewest hours possible and then lets you get out and do what you really want with the rest of your time. More or less, what you say here is I’m just going to X out that part of my life where I’m working. In the extreme case, the attitude is, “I don’t care how bad it is, I just want to get through it.”
The Discovery Channel series The Deadliest Catch about crab fishing in the Arctic shows how cold, smelly, and ugly work can be; but a few months of it and you get a year’s worth of wages and the free time to spend it. One important concept here is instrumentalism, which means that work becomes an instrument—a tool allowing you to get or do something else.
The third question about jobs and values involves money. Like sacrificing hours of work to get leisure, punching the clock to accumulate cash makes your job an instrument. Money is also the easiest way to organize your professional life. You can count it; if one job pays more than another, it’s better.
But this easiness can also be a trap. For anyone just out of college and facing a hazy and unclear world where all the decisions seem so difficult, it’s easy to get tempted by the smoothest route: just check the possibilities out there and go for whatever pays the most. At least that way you know you’re not messing things up completely. So there’s something to be said for going that safe route, but this also needs to get underlined. From the perspective of your responsibilities to yourself, the better-paying job is only the better job if you’ve already made the decision to value career options in terms of how much they pay.
There’s nothing necessarily wrong with that decision. Of course the Hollywood movies and the Habitat for Humanity volunteers hanging around campus looking for recruits are all going to tell you that you’ve got to follow your heart, do meaningful work, contribute to society. And if you face them up and flat out say you’re just in it for the money, there are always going to be whispers about greed and accusations like being a sellout.
In defense of money, though, dedicating your career to getting it makes a lot of sense, and it can do a lot of good, too:
• If you’ve got student loans, it’s good to be able to pay them back, as it’s the fulfillment of a duty to fidelity.
• If you do feel a need to support causes like protecting the planet, most advocacy organizations will be happy to receive a cash donation. The truth is, they’d probably rather have the money than a few volunteer hours.
• Making money means participating in an economy that’s getting richer, and doesn’t that end up making life better for everyone? Faced with Habitat for Humanity volunteers who ask you to join them in building shelter for the needy, couldn’t you even make the case that contributing to an economy that functions well actually helps people more—at least in the long run—by producing jobs so they can purchase their own home instead of relying on volunteers to build one?
• You may have children. Clothes are expensive. Summer camp is expensive. The holidays are expensive. True, little ones might still be a long way off, but when they come, a new set of responsibilities arrive, too, and just about the only way you can begin preparing for them now is by making sure that, on the money side at least, the house is in order.
There’s more to this list, but when it comes to choosing a job with an eye on the salary factor, it’s important to spend some time with this question: Why is it, exactly, that money has value for me?
If you’re looking for power, you could do a lot worse than being a judge. True, you spend your days listening to lame excuses for shoplifting and the bogus assurances of repentance from drug dealers, but with the pound of a (little wooden) hammer, you get a police officer to rumble over and haul people off to jail. In court, even someone mouthing off is enough to slap them with contempt and assign them to a few hours of lockup.
The military, politics, policing: all these fields will appeal to anyone who sets the possession of power as one of the most valuable aspects of a job. Less directly, people in the news media can decide which issues center popular attention by mentioning them on the radio broadcast, the TV news show, or the current affairs blog. That’s serious influence, shaping what people are thinking and talking about in our shared world.
Obviously, bosses in most fields of work have power. Usually they like to say that they have “responsibilities,” but frequently part of holding the responsibility to carry out a project is having the ability to hire and fire the people participating. Advertising is also about power. It’s not as explicit as the ability to get someone hauled off to jail or sent to the unemployment line, but masters of the craft can get people to believe that they really need some electronic device that they didn’t even know existed thirty seconds ago. There’s power in schools, too. If you’re in this class as a distribution requirement, that means someone has decided for you what you’re supposed to know.
The bottom line is that power—and the various jobs that grant it—exists in many places, and some are more transparent holders of force than others. So one of the keys to understanding power as a career option is being sensitive to the different ways it works. Commanding a platoon of soldiers fits the bill, but so does sending out an army of TV commercials.
Even more than money, power is vilified as a career goal. If you tell your friends that all you care about is money, they might think you’re greedy, but they’ll probably keep in touch over the years, figuring you could invite them to your Hamptons beach house for a great weekend. If you tell everyone that all you care about is power, though, they’ll probably think you’re weird and drop you off their Facebook friends list.
The image we get from popular culture of a power-hungry careerist is a drooling madman with clenched fists, too much caffeine, and maybe a copy of Machiavelli’s The Prince on the nightstand. And it’s not just the movies. Deborah Gruenfeld, a professor in the Stanford Graduate School of Business and expert in the psychology of power in the workplace believes: “Those in positions of power can be observed to act in a manner that is peculiar and that often has no connection to reality. ”Psychology of Power, accessed May 16, 2011, businessethicsworkshop.com/Chapter_5/Power_in_business.html.
Ouch.
There must be something there, though. If power were really so bad, we wouldn’t have to worry about it since no one would want it. But people do want it; it’s just that hardly anyone wants to admit it.
In a sense, prestige is the opposite of power. Almost everyone says they’d love a job granting prestige, but not many are willing to give up much for it. Going all the way back to the Wall Street Journal article, “historian” is on the top-twenty list of desirable jobs, and “philosopher” is there, too, on the longer, uncut version of the story. Salary isn’t the reason they’re included among the twenty best, and there’s not much direct power to those jobs either. (Despite what you think, professors don’t get any rush out of failing people. Only rarely, anyway.) There is job security if you’re a tenured university professor, but the main benefit of a prestigious job is the “wow” factor:
“What do you do for a living?”
“I’m a historian.”
“Wow.”
After a few minutes in which everyone in the conversation acknowledges that this is very interesting, the talk switches back to more normal topics. Later on, people quietly wonder why anyone would choose to spend more or less his or her entire life in school. That doesn’t detract from the prestige of the career path, though.
Being a doctor is prestigious, and (even if we hate to admit it) being a lawyer is, too, although it’s also true that part of the prestige accrues from the fact that you know people who have these jobs probably have some money too.
The Paul Teutuls (father and son), along with Mikey Teutul, hold prestige jobs at Orange County Choppers, and they were prestigious even before the TV show.
One of the thorny parts of prestige as a career goal is the difficulty in finding jobs that straight-out specialize in that. Frequently, what makes this kind of job attractive isn’t purely prestige, usually there’s something else mixed in. Being a judge is prestigious, but partially because you know there’s some real power there. Being a struggling rock musician is pretty good in terms of prestige, but only if there’s some sober hope that one day you’ll convert into a legitimate star and not just end up with no money and damaged eardrums. On the other end of the musical spectrum, a jazz musician who tells people that’s what he does for a living can usually count on getting a few people to say “that’s cool” or “that’s so interesting,” but again, part of the reason is the mixing of the music with the sense that this person has found meaningful work, something they’d probably be doing for free if no one was paying.
Finally, the signature difference between prestige and meaningful work is that prestigious jobs by definition demand an audience. People dedicated to a meaningful cause like protecting the welfare of animals can labor in obscurity all their lives doing simple things that virtually no one notices, like running a kennel for out-of-town dog owners where the pets get treated with extraordinary levels of respect. But for this work to cross from meaningful into prestige, someone at some point has to look and say, “Wow.”
Comfort on the job comes in all forms, spanning from the size of your desk, to how often you need to travel in cramped airplanes, to the clothes you need to wear while on the clock. The Wall Street Journal article grades jobs to some extent on comfort, though they call the category “Environment.” Here are some components of an (un)comfortable workday:
• Physical demands (crawling, stooping, bending, etc.)
• Work conditions (toxic fumes, noise, etc.)
• Physical environment extremes
• Stamina required
• Degree of confinement
This is a good list of factors that move the needle on the comfort scale, but there’s something very important missing from it. On the comfort scale, Arctic fishermen aren’t going to score highly in terms of physical working conditions; they’re cold and wet and living in a cramped space. The food’s bad. On the other hand, it takes a certain type of person to sign up for a job like that—a very, very specific kind of person. And if you’re seriously thinking about it, there’s a decent chance you’re going to hit it off with—you’re going to feel comfortable with—the other people who are doing it. The boat, consequently, will be uncomfortable, but the company of people you’re with may be comforting.
Looking not just at the physical characteristics of the job but the other characters who’ll be there doing it with you is important for the obvious reason: you spend a lot of time at work. (“I spend more time with you guys than with my husband/wife” is a constant refrain in some offices.) So if your sense of humor works well with a bunch of people you happen to know, and it turns out that many of them are nurses, that tells you something about how you’re going to feel about seeing them bright and early every morning, Monday through Friday.
In his book Vital Friends: The People You Can’t Afford to Live Without, Tom Rath organizes data from Gallup polls and studies to show that employees who have good friends in the office tend to stay longer in a job. It’s difficult to prove things about happiness, of course. It’s even hard to know exactly what happiness is, but it seems fair to suspect that there might be a connection between duration in a job and happiness with the job. And if there is, then feeling comfortable with the people you work with—laughing when they laugh, watching the same TV shows, whatever—should be a job consideration.
Pushing the importance of workmates in a different direction, in a blog post, a woman calling herself Penelope (she doesn’t give a last name) makes a point about flourishing at work: “You’ll learn the most on a job by having a great mentor looking after you.” “How to Pick the People You Work With,” Penelope Trunk (blog), May 6, 2009, accessed May 16, 2011, http://blog.penelopetrunk.com/2009/05/06/how-to-pick-the-people-you-work-with. If that’s true, then if you choose to work in a profession that’s full of the kind of people you respect, admire, understand, and get along with, you’re likely to do better for yourself than working with the kind of people you don’t take seriously (or who don’t take you seriously).
Fitting in, the point is, with the people at work isn’t just a fringe benefit; it’s a critical value to factor into the selection of one or another career line.
For the young, job security seems like a distant virtue, a fuddy-duddy aspiration for the over-the-hill crowd. In fact, even for the not-so-young it’s fuddy-duddy. It’s also one of the most volatile of the values you can assign to your job search, one of the most prone to surges and retreats.
When you wake up at 3 a.m. and then can’t get back to sleep because there’s a recession and you know cutbacks are coming, all of a sudden holding a position that maybe isn’t too glamorous but is certainly necessary—like being a day care worker—doesn’t seem so bad.
The day you learn your family will be growing by one is another of those moments when security’s importance blows up. And the day your husband loses his job, that’ll be another security surge.
Then there’s age. It’s a delicate subject—for legal reasons no employer wants to go on record saying they won’t hire people older than fifty—but there comes a point when years become a disadvantage for job seekers, which explains why an entire subfield of the résumé-writing business has now sprung up to manage the problem. Jeanne Knight, a certified career coach and résumé expert, says, “What candidates can do to make themselves look younger in a résumé is only list ten to fifteen years of work experience. Also, drop graduation dates and make sure you list any seminars or workshops that focus on new technology.” Ric Romero, “‘Get the Job’ Pt. 4: De-Aging Resumes,” ABC7, September 3, 2008, accessed May 16, 2011, abclocal.go.com/kabc/story?section=news/7_on_your_side&id=6369394.
So you can figure that if older people are going that far to camouflage their overabundant experience, it must be hard to get hired after fifty. And if that’s true, you better have good job security at forty-nine.
Finally, the easiest way to define job security is just the confidence that you won’t be fired next week, but the discussion broadens very naturally. For example, demographic trends tell us that the American population is aging, so if you’re deciding between studying to be an athletic trainer or a nurse, you may well figure that over the next twenty years it’s probably going to be easier to find work in the nursing home than the gymnasium, and that holds regardless of how secure any single job may appear right now. Or again, computer technologies keep entering our lives faster and from more directions, and that’s a good clue about future job prospects.
In any case, if you’re reading this, it’s possible that you’re what marketers are calling a millennial, meaning someone born between 1980 and 1995, more or less. If you fit the category, the TV show 60 Minutes believes you think this: “We have options. We can keep hopping jobs. No longer is it bad to have four jobs on your résumé in a year. Whereas for our parents or even generation X, that was terrible. But that’s the new reality for us. And we’re going to keep adapting and switching and trying new things until we figure out what it is.” “The Millennials Are Coming,” 60 Minutes, CBS News.com, May 23, 2008, accessed May 16, 2011, www.cbsnews.com/stories/2007/11/08/60minutes/main3475200.shtml.
Probably, the value of job security arrives along with the realization that companies can say the same thing about employees. A lot of them do.
Balancing the Values
One factor can be chosen to weigh more heavily than everything else combined when sorting out the values for initiating a job search. The imbalance would go a long way toward efficiently filtering career possibilities. For many, however, the priorities won’t sort out so easily: it’ll be necessary to balance competing values, to trade one against another when considering specific jobs and career paths. Someone may, for example, value both money and comfort, but that doesn’t help answer the question about whether a job on an Alaskan crabbing ship is more or less attractive than a summer on the beach in the lifeguard stand. In the longer term, holding the two values won’t help to decide between the career of an undersea welder or an office worker.
How can individuals get a grip on what their own priorities are, and how much each weighs? In his essay “Strategic Planning—For the Good Life,” Robert Solomon offers a provocative question: “Looking back over your life from a rocking chair, what would you like to remember—and how would you like to be remembered?”Joanne B. Ciulla, Clancy Martin, and Robert Solomon, eds., “Strategic Planning—for the Good Life,” in Honest Work: A Business Ethics Reader (Oxford: Oxford University Press, 2007), 106–7.
Of course, the idea isn’t to lock yourself into a life plan based on how things might look in the distant future. You have no way of knowing how things will be, and if you’re a millennial, we know you don’t like life plans anyway. Instead, the idea is to try to get a revealing angle on the question of what values in work really matter for you. The aim is to step away from everything and get a different perspective, a fresh look at the problem.
That’s important because real life, moving along fast as it does, can narrow your perspective, get you caught seeing things more or less the way everyone around you does. Faced with a career center job board filled with interview schedules of visiting corporate recruiters, isn’t it easiest just to sign up for the ones your friends are signing up for? If everyone in your sorority is talking about going to work at one agency or another, or if half the people you know are getting teaching degrees, the temptation’s there to just follow along.
When looking at things from extreme or unusual angles, those herding forces recede. At least for a bit you can make yourself turn away from what everyone else is doing, leaving you no choice but to arrange your own priorities for determining the kind of work you want to get involved with. Importantly, the idea isn’t to eliminate other people from consideration but to eliminate consideration that just imitates what other people are thinking. Here’s the beginning of a list of questions aiming to do that, aiming to shake up thinking about the career choice and force some sorting of the basic values determining which way the choice is going to go:
• Of the seven discussed values—meaning, leisure time, money, power, prestige, comfort, security—can you rank them, or at least group them, from the most to least important for you? Can you take some of the jobs or careers you’ve been considering and loosely rank them in terms of how well they fit with your list of values?
• To make the list of values more manageable, can you cut it down by just eliminating some concerns that you really don’t share?
• Are there any values you think should be added to the list?
• Can you make a short list of other people whose opinions are important to you, and then loosely imagine how they would rank the seven values for evaluating jobs? If you can, is their ranking similar to yours or different? If it’s similar, are you sure you’re thinking for yourself? If it’s different, are you sure your values for work align with the kind of life that you respect?
• What would you like to tell your parents you’ve decided to do for a living?
• Career day at the elementary school. You’re standing in front of your own child’s class talking about your work. What kinds of things would you like to report and be proud to say? Looking back at your original list of values for jobs, does it correspond with the classroom scene?
• You’ve got six months to live: what do you do? Is it something that might be related to work or is it a pure leisure activity? (Can you imagine any job that would allow you to do that activity, whatever it is, throughout your career?)
• You’ll live 600 years—and have to work during 550 of them—does that change your work priorities? Should it?
• You’ll live 600 years—and have to work during 55 of them—does that change your work priorities? Should it?
• For you, is the term couch potato a slur or just the name of a comfortable lifestyle? Are there anti–couch potato and pro–couch potato career tracks?
• Your rich uncle dies and leaves you a sum of money and private instructions to use it to put poor children through school in Mexico. It’s also enough to pay your college and leave a good amount left over for whatever. No one’s watching—no one will ever know. What do you do? What does this tell you about the place money has in your life?
• Madonna and Mick Jagger are among the world’s two richest rock stars. Imagine you could have all their money, but be a complete unknown and have no sense of rhythm. Would you prefer that or would you trade all the money to have their success, voice, and rhythm for one year on a world tour? Does the decision correspond with your original ranking of the seven values?
• For you, which would be better: spending big money or having people know you’ve got big money to spend? If it’s the second, is there a way to command respect from others that’s easier to achieve than wealth?
• Friday night, you’re with a new group of people who know little about you. Would you rather tell them you’ve been invited to a dinner at the White House for notable citizens or you’ll be having dinner tomorrow at your own expansive beach house?
• You sign up for a blind dating service, hoping to meet someone to marry. The only thing you get to choose about the man or woman you’ll be paired with is his or her job. What job would you choose to match you? Next, imagine that you’re not ready for marriage, still exploring, and you go to the same service. What’s the job this time? If the two jobs are really different, does that reflect anything about where you’re at with respect to the kind of work you want for yourself?
• Do you like being in charge, no one is telling you what to do, even telling other people what to do? Be honest, no one’s listening. By the way, would your answer change if people were listening?
• A brutally long Friday at work comes to an end at 9 p.m. On the elevator ride down with some people in the office, there’s a power outage. No one’s around to fix the machinery or let you out. What kind of people would you like to have in the elevator with you? Is it possible to match these people up with the kind of people frequently involved in one or another profession? (Alternatively, what kind of people would lead you to investigate how your keys or the pen in your pocket could be used as a suicide implement?)
• If you could wear anything you wanted to work every day, nose rings included, what would it be? Is there really an office anywhere where people do dress that way? What would you be willing to give up to work there, and what does that tell you about the importance of environment (or comfort in the broad sense) for your work?
• At the end of every month, your boss gives you a choice. You can have your \$4,000 check or you can spin a lottery wheel with a range of numbers from \$1 to \$8,000. Would you take the \$4,000 check or spin? Does this tell you anything about the importance of job security?
• If you’ve had time to read through this entire list of questions, do the answers you gave more or less correspond with the ranking of the seven values—meaning, leisure time, money, power, prestige, comfort, security—that you set up at the beginning?
Whose Job Is It, Anyway?
No one can decide for you what line of work to start down; it’s a decision only you can make and that you have to make for yourself. This doesn’t mean, however, that your life is the only one involved in the decision. Here’s a blog post: “I think people need to find the right job for them, the one that will make them happy. My parents are always telling me to get a successful and well paying job, however the job that I really want to do probably isn’t the best paying job, but it would make me happy if I fulfill my dream. I think people need to go out and do what they want and they will be successful in different ways. ”Karen Sternheimer, “How Great Is Being a Sociologist?,” Everyday Sociology (blog), January 24, 2009, accessed May 16, 2011, http://nortonbooks.typepad.com/everydaysociology/2009/01/how-great-is-being-a-sociologist.html.
Sounds good, but is it right? If you’ve adopted egoism (morality = self-interest) as your ethical compass, then it is. Egoism makes the job search relatively easy; just find the one that will make you most happy.
On the other hand, if you think of yourself as more of a utilitarian—someone guided by the conviction that the morally recommendable act is the one bringing the greatest good to the greatest number—then it’s not clear whether this is the right way to go or not. On one side, it’s true that pursuing your dream of professional satisfaction is good, but your parents’ satisfaction—everyone’s satisfaction—has to be factored in too. It could be that your parents’ wishes—and the happiness they enjoy if you follow their advice—outweigh the happiness and welfare you take from a career they recommend against.
Staying with the parents, and taking their side, what kind of ethical arguments can they launch against your career choice? One of the strongest is going to be obligation in the sense of gratitude, in the sense that we have a duty to repay those who’ve given to us. Most of us sense this as the courtesy of returning favors. Sometimes we feel it in an inverted form as the desire to decline a gift that seems so great we won’t be able to pay it back. The case could be made that this sense of obligation and gratitude is a virtue, the result of a proper upbringing. Or it may be more like a duty, a sense of fairness inherent in the idea of ethics in the first place. Regardless, it’s too late to go back now for you and your parents. All you can do is add up everything they’ve done for you and everything you’ve done for them. It’s doubtful that there’s any kind of balance.
In Portuguese, the word commonly used to say “thank you” is obligado, meaning I’m obligated, and there aren’t many instances where the word is more apt than the parental relation with children. Faced with the obligation, these are possible responses:
• I accept my obligation and will follow the career path my parents desire.
• I accept my obligation, but I’ll pay it off by bringing up my own children and letting them off the hook when they hit adulthood (or through some other mechanism of repayment).
• I accept my obligation, but I won’t respect it.
Of course people are always free to pursue that last course, to say the obligation is there and I don’t care. But if you want to continue acting ethically, that shifts the burden onto you to build a structure for justifying walking away.
Moving from parents to others, what kind of ethical responsibilities do you hold to your spouse if you’re married and to children if they arrive? There’s nothing wrong with being, say, a starving actor working for that one break on the way to fame. But it’s a different thing entirely when you’re asking someone else to starve too so that you can go on trying to be the next Johnny Depp.
Do you owe anything to that math teacher who saw that you had exceptional ability with numbers and used her own time after class to patiently tutor you on the subject? She probably wouldn’t have bothered if she knew you were going to end up working at something that doesn’t involve math-related skills. She did bother, though, so does that create a responsibility—even if it’s only a small one—to use that ability in your professional life, to find a job that exploits your skill with numbers that she helped you acquire?
Finally, at the broadest level, what obligations do you have to the impersonal community around you, to all those people you barely know or have never met—the woman behind the counter at the gas station, the plant worker in Germany who helped assemble your car, some taxi driver in Thailand whose life will never touch yours in any way? Do you owe anything to them when thinking about your long, eight-hour days?
This Is the Perfect Job for Me…Right Now
One way of dividing up the responsibility felt to yourself and to the others who share your world is career sequencing—that is, defining zones of life and evaluating each separately in terms of work priorities and aspirations. Meaningful labor—signing up for a rugged, low-paying trip on the Greenpeace ship—may fit with your values right out of school. The trip allows a broad ethical vision of work, one seeking to incorporate the welfare of others at a good time for you, while your own needs are limited. Later on, lucrative work—signing up for a desk job administering a tourist cruise ship where the hours are fewer and the pay higher—might prove the better fit.
Making the move from meaningful work to a more salary-centered vision of the workplace may simply correspond to the realization that walking around in ripped jeans and a t-shirt doesn’t work with a receding hairline. Or it may be that the others you hope to benefit with your time have come closer to home: it’s not that you want to make the world a better place anymore so much as make the world better for your family.
The Tuck School of Business has published a report on sequencing in today’s world. Tuck Executive Education, Changing the Career Ladder: Paving Flexible Pathways for Today’s Talent (Hanover, NH: Dartmouth, 2011), accessed May 16, 2011, worklifefit.com/pdf/TuckSurveysummary.pdf. Among the findings: employees, led by women especially, are professionalizing the movement in and out of the workplace. Exiting the daily grind to have a child is no longer understood so universally as leaving work so much as a planned interruption to pursue personal goals. The difference between leaving and interrupting is that many women now step off the career track fully intending to return in the not-so-distant future and to resume the professional trajectory already established. It’s not putting on the brakes so much as taking a detour.
Men, the study finds, are following suit. Some are taking paternity leaves, more or less along the lines pioneered by women, but the study also finds workers interested in professional detouring for the following reasons:
• An avocation outside of work
• Stress and burnout
• Entrepreneurship
In all three cases, space along the career’s way is being pried open for different values to enter and at least temporarily redefine the relation with work.
Why don’t people sequence? What keeps them in jobs they’d like to get away from, at least temporarily? Fear that they won’t be able to get their jobs back leads the list. The study also shows, though, that many employees in essence think that sequencing is wimpy, and it’ll mark them as unreliable and, therefore, unpromotable. That perception may not be right, though. The study is a snapshot of a changing situation, so it’s difficult to draw too many conclusions, but the authors do sense that that the direction of evolution is toward sequencing, not away. More and more higher-level managers are willing to accommodate employees who want to take detours; they’re willing to make space for them to come and go (as long as the coming and going isn’t constant).
To the extent that’s right, the ethical relation with job selection transforms. It’s no longer the formation of values for choosing a career track leading into the indefinite future; instead it’s a process. The ethical question about your work, “What’s the right kind of job for me?,” is now a lingering concern, and answering is a constant responsibility.
Do I Have to Decide?
Some millennials are big on job hopping, on experimenting with work first and then deciding on a path instead of doing all the ethical considering up front. This is an attractive option.
There’s a risk here, though: it’s the trivialization of professional life. If you’re just going to take whatever job comes along and see how it works out, then why bother even thinking about it at all? In fact, why bother switching? If you’re not going to do the work beforehand to get a grip on the kind of employment, on the general direction of professional interest that supports the values you’ve decided to live by, then how are you going to know the right job when you find it? Why switch jobs, in other words, when you don’t know what you’re looking for?
This was one of Saint Augustine’s (AD 400) durable pieces of wisdom. It’s very simple: if you don’t know what you’re seeking before you start looking, then how are you going to know when you’ve found it? Trial and error, in other words, when you’re looking for the right kind of job (or the right romantic partner, or the right beer, or whatever) only works if you already know what’s going to count as an error and what counts as success.
Of course no one’s going to get everything down perfectly at the beginning. Ethically, there’s a kind of bind here paralleling the first job and experience catch (you can’t get your first job without experience, and you can’t get experience without your first job). Similarly, you can’t know exactly what kind of work fits your values and outlook until you’ve learned how things really are out there in the nine-to-five world, but that’s not a convincing reason to fall off the other extreme and just spin the wheel, take whatever comes your way, and switch jobs without thinking
Key Takeaways
• Pursuing a specific job is an economic and also an ethical decision.
• Specific values shape the ethics of the job search.
• Job seekers hold ethical responsibilities both to themselves and to others.
• Job sequencing allows workers to manage shifting ethical responsibilities as their lives evolve.
Exercise \(1\)
1. What are some of the differences between a job that provides meaningful work, and one that provides prestige?
2. Can leisure time—maximizing it—be pursued on its own as a value in the job search, or does it need to be combined with other values? If it needs to be combined, which values might work best?
3. If money is selected as the prime value a job seeker decides to pursue, what other values may become easier to reach because of the money, and which values may be pushed further away?
4. What’s the difference between power and prestige? Can you think of a job that grants power but little prestige and one that grants prestige but little power?
5. For you, what are the components of comfort—do they include flexible hours, working in an office instead of outside, something else? Can you rank the components as more and less important?
6. What responsibilities to others may a job seeker consider when looking for a job?
7. What is career sequencing? What are some reasons a person may choose to sequence, and what are some reasons a person may choose not to be a sequencer? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/05%3A_Employee's_Ethics-_What's_the_Right_Job_for_Me/5.01%3A_Finding_Jobs_to_Want.txt |
Learning Objectives
1. Define reasons why an organization’s work may be viewed as unethical.
2. Consider how working for ethically troubling organizations can be managed.
The Psilocybin Project
The Harvard Psilocybin Project began in 1960 and included some of the university’s leading and most innovative professors, especially from the psychology and related departments. One of their projects—the Concord Prison Experiment—used the newly developed drug psilocybin on inmates. Professors wanted to discover whether the medication could reduce antisocial behavior and recidivism. Another project, this one carried out in tandem with the Harvard Divinity School, used the same drug to experiment with the bond felt between young theology students and their chosen profession. In both cases, significant, even mind-blowing success was initially reported.
The experiments didn’t last. Other Harvard professors raised questions about the ethics of using this drug on humans. An intense conflict erupted in the university. The ethical propriety of the entire Psilocybin Project, the decision came down, was, in fact doubtful. That quickly led to the project’s shuttering and then to the dismissal of several well-known professors who protested too loudly in favor of their work and its value, both scientific and moral.
Not all of those fired professors just went away. Outside the university some continued defending their work with principled stands and meticulous arguments. One of those defenders, Dr. Leary, achieved such broad public recognition that he ended up being mentioned in a song by The Who.
Not only did Timothy Leary defend the Psilocybin Project from outside university walls, he also continued with his avid experimentation. Pretty soon the experiments weren’t only outside the university, they were also outside the law because psilocybin, like its close relative LSD (lysergic acid diethylamide), was categorized as an illegal substance.
Is it immoral to experiment on people—especially on prisoners who may feel pressured to participate—with psychedelic drugs, concretely with magic mushrooms (the organic source of psilocybin)? Assume just for the sake of argument that it is wrong and the experiments were immoral. Now who should feel guilty? The leaders of the Psilocybin Project seem like good candidates since they knew exactly what was going on, and they were the ones handing the doses over. What about the graduate students who followed their professor’s lead and joined in the distribution and application of the drugs? Or the administrators at the university who financed the project but maybe didn’t know exactly what the experiments involved? What about the undergrads whose tuition money paid for all this? What about the chemists who derived the substance from mushrooms? Or the lab techs who actually made the stuff? What about the secretary who happened to be assigned to work in the psych department and processed some of the paperwork? Where do we draw the line?
One of the most difficult constellations of questions facing conscientious job seekers is: what kind of organization is it OK to work for? Specifically, to what extent am I personally responsible for the things my company does? There are the two questions here:
1. What makes a company’s work—or a university’s, or a nonprofit organization’s—unethical?
2. I’ve got an attractive job offer from an unethical organization: can I work there anyway?
What Makes an Organization’s Work Unethical?
In a world spattered with poverty and desperation, exploitation of workers is one of the most frequently cited areas of corporate abuse. Advocacy organizations peopled by volunteers who enjoy traveling have proven very effective at locating and drawing attention to overseas sweatshops. The Nike company pays athletes millions to break a sweat for a few hours so they can get some good action video for commercials selling athletic shoes, but they pay sewers in Asia only a few dollars to sweat all day long making those shoes. And what about the cameraman hired to shoot the commercial? He’s earning a lot more than the sewer, but his wages are still closer to the sweatshop level than the NBA star level.
In An Economic Analysis of a Drug-Selling Gang’s Finances, authors Steve Levitt and Sudhir Alladi Venkatesh report on a drug gang studied over the course of several years. It turned out that the street dealers weren’t even getting minimum wage for their dangerous efforts: about \$200 a month for dealing. Above them, however, the gang leader made between \$4,000 and \$11,000 a month. It’s unclear whether he paid taxes.Steven D. Levitt and Sudhir Alladi Venkatesh, “An Economic Analysis of a Drug-Selling Gang’s Finances,” Quarterly Journal of Economics 115 (August 3, 2000): 755–89.
Questions about wages and sweatshops will be pursued more fully in later chapters, but here it’s enough to note that vast discrepancies in wages throughout a company raise concerns that the organization is exploiting employees. That may lead job seekers to think twice before signing on, even if they’re not the ones being exploited.
Exploitation of consumers is another murky direction. It’s true that many immigrants from Asia, Latin America, and elsewhere received interest-only home loans in the early 2000s with repayment schedules beginning low but later ballooning to monstrous levels. It’s also true that no one forced them to sign the contract; they hold responsibility for their acts, no doubt. However, considering their imperfect English and little knowledge of the American world, is it fair for the mortgage company to even offer these kinds of loans, which seem more predatory than cooperative?
Tobacco companies selling addiction sticks, which sometimes become cancer sticks, aren’t clearly removed from charges of exploiting their own buyers.
Breakfast cereals aimed at children frequently boast on the box that the nuggets or the puffs contain 100 percent of the recommended daily allowance of various vitamins and minerals. They don’t say anything about sugar highs and crashes. In all these cases, questions about whether consumers are being respected may lead potential employees to question whether they want to get involved in the operation.
Environmental exploitation is frequently invisible in the sense that few people suffer direct consequences of pollution, deforestation, and poisoned water and soil. There are orange alert days in many cities now when children are told not to play outside. But for the most part, companies that pollute may carry on without being held directly responsible for harmful consequences. Of course there are extreme cases like the Love Canal, the neighborhood constructed on a landfill covering thousands of rusting steel barrels of industrial waste. Families living there reported acid slicks running down the street during rains, puddles of rancid chemicals forming in their yards, and birth defects at astronomical levels. Whether, finally, an organization exploits the environment in obvious or not-so-obvious ways, workers may ask if ethical obstacles stand between them and continued employment.
Ethically dubious missions and connections is another category of corporate irresponsibility. The case of Harvard experimenting with acid fits here. So too the drug gang studied by Levitt and Venkatesh. Questions could also be directed toward organizations specializing in reuniting families across borders (people smuggling).
Almost any social hot-button issue is going to double as a source of ethically challenged industries; there’ll be people for it and others against it, but either way the questions are there. Circles of controversy surround
• abortion doctors,
• judges sending inmates to death row,
• advocates of assisted suicide.
One thing all these people, professions, and institutions have in common (besides inciting ethical debates) is that they need to hire workers—telephone operators, assistants and administrators, marketers and finance people—just like any other business. You can work for them.
You could also work for a specific kind of lawyering outfit, the one specializing in clients who are very wealthy and very guilty: there’ll always be law firms—especially in the field of tax law—specializing in raising a reasonable doubt where there really isn’t any.
Massage parlors need receptionists and janitors just like every other business. The horse racetrack hires a small army of diverse workers to keep taking bets. The state lottery contracts actors, directors, film editors, and media experts to make and run ads showing jubilant winners tossing money in the air; on the other hand, they don’t spend much time hiring statisticians to explain to the public what the small print on the back of their ticket means: “Really, the chances you’ll haul in the Super Magnum Jackpot are about zero.”
Conclusion. Ethically conscientious individuals don’t have to look too hard to find jobs that make them ask, am I participating in something that’s wrong?
I’ve Got a Job Offer at an Unethical Company; Can I Work There Anyway?
Yes. The question is how.
Ignore it all is one option, pretend like the ethical stain isn’t there or at least that you don’t see it. Here’s an example of what that strategy can look like. Most cities have at least one free and local alternative culture publication, usually published on newspaper-grade paper; it comes out on Thursdays and is called The Observer or something like that. Their reporters hit the street to get the latest on the alternative music scene and idealistic political grassroots operations and government abuses and, above all, altruistic, principled causes. The Dallas Observer is the Dallas version. In the November 5, 2008, publication there’s an article called “Pole Dancing—Good for the Body, But What About a Woman’s Soul?” It comes with an honest and thoughtful objection to the caricature of femininity that was developed and mass produced with the express goal of turning on a male audience. Megan Feldman, “Pole Dancing—Good for the Body, but What about a Woman’s Soul?,” Dallas Observer, November 6, 2008, accessed May 16, 2011, http://www.dallasobserver.com/2008-11-06/news/pole-dancing-classes-mdash-good-for-the-body-but-what-about-a-woman-s-soul.
A few pages after the author finishes making a strong moral case against the exploitation of this caricature, the full-page spread devoted to Debbie comes. She’s looking tight in her white bikini. She wants to talk to you, and her phone number’s right there on the page. In little print it says it costs \$1.49 per minute. On the next page there’s Robert. He’s wearing even less. The phone call costs the same.
It’s not anybody’s fault that Debbie and Robert (or whatever their real names are) figure so prominently on the advertising pages of a newspaper that’s so set against stereotypes like Debbie and Robert. It’s only a fact that that’s where the money comes from to keep the otherwise idealistic and ethically elevated paper in business. So what can the reporters do? They can object to the ads; but without them and their revenue, there won’t be any publication left to print their articles decrying these kinds of ads. It’s a tough spot. There’s no clear way out, which is why it’s understandable to go forward pretending you don’t see the contradiction.
There are pacifists working for Boeing, the same company that makes warplanes. Somewhere there must be a volunteer at the Society for the Prevention of Cruelty to Animals who holds down a day job at L’Oreal, a company vilified on Internet petitions for its animal testing. Cherry Marrone, “Stop L’Oreal’s Animal Testing,” Care 2 Petition Site, accessed May 16, 2011, http://www.thepetitionsite.com/1/stop-loreals-animal-testing. There are parents working at General Mills who’d die before giving their kids Cocoa Puffs. There are strict Catholics working for the pharmaceutical company that manufactures birth control pills. The list will never end because it’s always possible to pretend you don’t see the conflict between your own moral convictions on one side and the actions of the company you work for on the other.
But the decision to remain blind is difficult because pretending you don’t see essentially means you’re lying—lying to yourself. The question raised here is this: can that lying be justified ethically?
If you’re a strict believer in the standard duties, which normally include the duty to honesty, you’re going to have problems. You can, however, argue that you have a still more compelling duty to provide for your family and loved ones. So if the job you have is the best one you can get, then you can make the case that your responsibility to them is greater than your responsibility to be honest with yourself. Making a similar argument but from a slightly different direction, a utilitarian can point out the benefits a paycheck brings—not just for the worker but also for the family and the economy generally—and from there say that lying to yourself is good because it produces a greater general good.
Of course there are arguments that could be raised against these justifications and so the debate rolls on. What’s important is that pretending an ethical conflict between your convictions and your company simply isn’t there may be justifiable.
Explicitly Accepting Employment at an Ethically Difficult Workplace
Another option for accepting a job offer in an organization you consider to be morally stained is to explicitly accept that I work at an ethically difficult company and go on to justify the decision. There are two directions for consideration here:
1. How seriously wrong do I believe the company’s actions are?
2. How close is my work to those actions I believe wrong?
There’s a difference between working for a firm that experiments on animals (L’Oreal) and working for one that experiments on humans (the Harvard psychedelic drug project). Most ethically challenged jobs are more like the former than the latter. That’s not a license to simply discount the reality that the work may participate in a larger and objectionable process, but it does open the way to a move from an absolute to a balanced ethical stance: it’s not that “something’s going on there that’s wrong and therefore I can’t be involved at all”; instead “something’s going on there that’s wrong, but things could be a lot worse, plus, the right and good things I can achieve by taking this job are pretty significant.” So start with the idea that even if you think experimenting on animals is wrong, it’s not as bad as experimenting on humans. Then add the good things that could come from working for an animal-abusing company. Here are two possibilities:
1. The post allows me to maximize the use of my personal strengths. Ethics isn’t only about duties to others; there are also duties to you. Maximizing your own potential is one of them.
2. The post allows me to better equip myself to get an improved job further down the line. If you really want to avoid touching unethical work, then your best option may be to do whatever’s necessary to build the strongest résumé possible. Once you’ve done that, your options for working will increase and correspondingly the possibilities for ethically satisfying employment.
Moving to the next question—how close is my work to those actions I believe are wrong?—there’s a difference between experimenting on animals and preparing the tax return for a company that experiments on animals. Making this point sharper, if you adamantly refused to participate in any company that has anything to do with animal testing, then you’re not going to be able to participate in anything. You’re not going to be able to buy paper from the company that sells paper to the animal testers. You’re not going to be able to use Google because people at the animal testing company buy advertisements on Google search pages. The list is endless in an economy that’s totally interlinked, and our economy is pretty close to totally interlinked.
Now, if that’s right, then the relationship between you and the immorality that indisputably exists in the economic world—and probably in the company you work for in one way or another—isn’t an issue of right and wrong so much as a question of distance. In other words, when you’re contemplating a job, the question isn’t whether something bad is happening there; it’s “how close does the stink get to my office?”
More, it may even be that accepting a job at a company can be a route to changing that company’s policy. Of course that’s going to be more than difficult at a giant concern like L’Oreal, but if you’re interested in the environment, you may end up at a small local firm that sells plastic (not biodegradable) bottles of water, and you can advocate the forming of a company recycling program. It’s a small thing. Almost absurd. But it’s no closer to absurd than the other choice, which is the big thing: simply refusing to work for any company that acts objectionably in the world in one way or another.
Key Takeaways
• There is a wide range of reasons why an organization’s work may be viewed as unethical.
• There are multiple strategies for managing concerns about working for ethically troubling organizations.
Exercise \(1\)
1. What are four reasons an organization’s actions may be viewed as ethically troubling?
2. Ethically, how could you justify ignoring the fact that there's a conflict between your convictions and the actions of the company you work for?
3. Why might a potential employee of an ethically troubling organization ask how seriously wrong the organization’s actions are?
4. Explain why working for almost any organization may be ethically troubling.
5. If someone were working for an organization involved in ethically troubling activities, what questions may they ask themselves as they consider whether they should continue working there? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/05%3A_Employee's_Ethics-_What's_the_Right_Job_for_Me/5.02%3A_Working_for_Ethically_Complicated_Organizations.txt |
The Ethics of Grunge Work
Source: Photo courtesy of ictsan, www.flickr.com/photos/ictsan/3025080337/.
Jason Everman (b. 1967), Kodiak, Alaska
In February 1989, Jason Everman joined a new act called Nirvana as a backup guitarist. A few months later the group’s first record, a raw and noisy effort titled Bleach, was recorded and released by an obscure local distributor.
Everman played in the 1989 summer tour supporting Bleach, then was kicked out of the band: the rest of the guys found him too showbizzy on stage and too introverted off it. Bleach scored a minor success on the college radio circuit.
Nirvana’s 1991 follow-up, Nevermind, is one of the more important and financially lucrative pieces of recorded music in history.
In 1990, Everman joined Soundgarden to play bass on their promotional tour for the EP Loudest Love. Not meshing with the other band members, he was sent packing after the tour’s end.
Soundgarden’s 1991 release Badmotorfinger scored a moderate success with the indie crowd. The 1994 follow-up, Superunknown, debuted at number one on the Billboard 200 album chart. It stayed there.
In 1994, Everman joined the US Army Rangers and then a special forces unit. He toured in Afghanistan and Iraq. He was honorably discharged in 2006.
Fifteen minutes of fame came to Everman on November 10, 2008, when he was featured in a New Yorker piece titled “Theatre of War.” While being interviewed to provide a veteran’s perspective on war, a friend of Everman’s breaks in to add that besides being a warrior, Everman had once been a musician. The article’s author was skeptical. But, she writes, later investigation revealed that Everman had, in fact, been a small-time rock star.
During the interview Everman related that he’s a devotee of the Renaissance intellectual Benvenuto Cellini, who believed that in order to live a full life, you must develop each of the soul’s three parts: the artist, the warrior, and the philosopher. At the time of the interview, Everman—bearded and heavily tattooed—was studying philosophy at Columbia University in New York City.
Kurt Cobain (b. 1967), Aberdeen, Washington
Cobain was born into a broken home and eventually lived with a born-again Christian family. He adopted the religion. The faith didn’t last; soon he was spray painting “God is Gay” onto random pickup trucks in the neighborhood.
In 1981, his uncle gave him a choice between a bike and a guitar for his birthday. He went for the guitar.
By March 1988, Cobain had formed a noisy outfit called Nirvana. They were playing dives around Seattle, doing bad covers, and making up some of their own songs. They decided to make a record. No one wanted to sponsor them. They decided to go ahead anyway and pay for it themselves. None of them had any money.
In 1989, another local musician, Jason Everman, agreed to pay the \$606.17 it cost to make the record if they’d let him join the group. They did. They recorded Bleach. Though he’s named on the credits and pictured (hazily) on the cover, Everman didn’t actually play on any of the tracks. Cobain said the credit was a symbolic thanks to Everman for paying the \$600 it cost to record the album. Everman never got his money back.
The group took the music on the road, and when they returned home, they kicked Everman out.
The group’s next record, Nevermind, knocked Michael Jackson’s disco sensation Dangerous off the top of the charts in January 1992.
In 1991, Cobain met Courtney Love. They did massive drugs, got married, and she got pregnant.
While revolving through detox programs and heroin binges, Cobain wrote music for the next album. In Utero debuted at number one in 1993.
In 1994, Cobain committed suicide with a shotgun. These are fragments of his note:
I haven’t felt the excitement of creating music for too many years now. For example when we’re backstage and the lights go out and the roar of the crowds begins, it doesn’t affect me the way it used to. The fact is, I can’t fool you, any one of you. It simply isn’t fair to you or me. The worst crime I can think of would be to rip people off by faking it and pretending as if I’m having 100% fun. Sometimes I feel as if I should have a punch-in time clock before I walk out on stage.
I can’t stand the thought of the self-destructive death rocker I’ve become. I don’t have the passion anymore, and so remember, it’s better to burn out than to fade away. Wikipedia, “Death of Kurt Cobain,” accessed May 16, 2011, http://en.Wikipedia.org/wiki/Death_of_Kurt_Cobain#Suicide_note.
Exercise \(1\)
1. Consider the seven values used for ethically defining jobs: meaningful work, leisure time, money, power, prestige, comfort, and security.
• Just from what you’ve read about Everman and Cobain, which values do they share? Where do they diverge?
• Are there any values not on the list that could be added to apply to the careers of either Everman or Cobain?
2. Everman worked to live; Cobain lived to work.
• What does that mean?
• Do you think it’s true? Explain.
• Does this split also divide up the seven values used for ethically defining jobs? If not, why not? If so, what’s the split?
3. Everman is a sequencer; he wholeheartedly followed one career path, then a second, and a third. He’s a different kind of sequencer than the more standard version: a man or woman following a single main career path interrupts it to do something else (have a child, start a small company, travel around the world) and then returns to the old job.
• What’s the difference between these two kinds of sequencing in terms of the value of work and what it can give you?
• Would it be useful to have different names for these two types of sequencers, or would that be splitting hairs?
4. According to Everman, Cellini believed that in order to live a full life, you must develop each of the soul’s three parts: the artist, the warrior, and the philosopher. Assuming this is true, must it necessarily involve one’s work life? Is it possible to define a full life that doesn’t include any reference to your gainful employment (in other words, is it possible to live fully without worrying about what your job is)? What values for work are implied by your response?
5. Cobain comes to believe that he’s unethically exploiting consumers.
• In what sense is he unethically exploiting consumers?
• What does Cobain’s feeling reveal about the values he associates with his work life?
• Was Cobain’s response to his perceived failure justifiable? Explain.
6. Whose career would you rather have: Everman’s or Cobain’s? Why? What does that tell you about your values?
7. In the career you’ve chosen for yourself (just pick one, if you haven’t), what would it mean to burn out? What would it mean to fade away?
8. Is it better to burn out or fade away? Justify in terms of the values that can be attached to working life.
Cop or Drug Dealer
Source: Photo courtesy of Todd Huffman
Roberto Pulido, a ten-year veteran of the Boston Police Department, was arrested by the FBI and charged with protecting drug dealers, cocaine dealing, identity theft, obstruction of justice, robbery, assault and battery, and money laundering. David S. Bernstein, “Cop or Drug Dealer?,” Phoenix Boston, November 9, 2006, accessed May 16, 2011, thephoenix.com/Boston/News/26961-Cop-or-drug-dealer/?rel=inf.
Exercise \(2\)
1. What are some of the advantages to being a policeman? What are some of the advantages to being a drug dealer? Presumably, Pulido started out being an honest cop, and over the course of ten years fell (or climbed) into the illegal drug business. Can you imagine how the seven values of his work might have shifted as this transformation developed?
• Which values grew in importance?
• Which might have fallen away?
• Could any of the values have been maintained through the shift in professions?
2. Officer Pulido is a career sequencer, but it’s a unique kind of sequencing because his two careers actually contradict each other. It’s not that he took time off to follow some outside interest, and it’s not that he pursued various jobs that all fit into a larger plan. He did one thing and then the opposite. Is there a sense in which he has canceled out his professional life? Explain.
3. Imagine that you are considering two career directions: joining the police academy or growing some pot in the basement and getting a start in the drug-dealing business.
• Regardless of whether you’d ever actually do it, what ethical theory (duties, rights, utilitarianism, some other) could be employed to justify the decision to go the drug route?
• What ethical theory (duties, rights, utilitarianism, some other) could you employ to justify the decision to go the police route?
4. Apply Nietzsche’s theory of eternal recurrence to the cop/drug-dealer choice. You would have to choose one life and live it over and over forever. Which would you choose? Why? Does that tell you anything about what you should do with the one and only life you have?
5. Doctors and pharmacists deliver powerful, addictive drugs that send waves of tremendous pleasure through the users’ bodies (and sometimes those meds result in abuse and death). So that makes three career directions that have something in common: doctor, pharmacist, street drug dealer. Now, in terms of the seven values of work, what do the jobs have in common, and where do they diverge?
6. From the newspaper report on the Pulido case, “Pulido bought a Hyde Park building where his wife began teaching dance to children—and where once a month for the next several years Pulido hosted and provided protection for drug-and-sex parties. Admittance ran from twenty to forty dollars, and narcotics were often in open use. Lap dances in the “boom-boom room” cost an additional twenty dollars. As many as one hundred people attended on a given night, including well-known felons, drug dealers, and law-enforcement officers—some in uniform.”
Compare and contrast Pulido’s wife’s job and Pulido’s. Which post is most desirable for the person valuing prestige?
7. How could Pulido’s drug operation be characterized as unethical in terms of the exploitation of consumers?
8. In a sense, Pulido’s wife worked for her husband. By running a dance school out of the building where Pulido operated, she provided cover for his operation.
• How could the argument be made that she has an ethical responsibility to resign from her job by shutting down the dance classes so that her husband could no longer use the space to sell drugs?
• In ethical terms, how could she justify pretending not to know what was going on in her building once a month?
• In ethical terms, and assuming she explicitly recognizes and accepts that she’s providing space and cover for her husband’s activities, how could she justify continuing to work for his operation?
9. Assuming you were a drug dealer, who would you sell to, and not sell to? Why? Does this tell you anything about how willing you might be in the future to work for an ethically challenged corporation?
Investigative Fashion Journalism
Source: Photo courtesy of mangpages, http://www.flickr.com/photos/mangpages/3701097713/.
The blogger Dahlia (she doesn’t provide her last name) wants to invent a new career. She calls it investigative fashion journalism. In condensed and slightly altered form, here’s what she writes:
Investigative Fashion Journalism is a different kind of job. When people talk investigative journalism they think Watergate, Area 51, etc. Also, due to watching too many movies, there’s the fear that the consequences of investigative journalism include losing your job, your family, your money, and on the very rare occasion—your life. (Though last I’ve heard, the fashion journalists that I’ve admired are still very much alive.) Part of the fun is being your own detective by trying to dig up evidence, to see what the big cover up is about. I mean, how many of you were actually aware that illegal immigrants working long hours in manufacturing jobs were happy being paid minimum wage in Europe?
We love scandals. And what better scandals can you uncover than the fashion industry? I mean I know celebrity gossip is hot right now, but exposing a multi-billion dollar industry gives me a bigger high, but that’s just me. Also, by exposing the corruption like those working illegal immigrants, you can change how the industry works and perhaps enforce better practices for all current and new companies coming into the mix. If you lead by good example others will follow, right?
If local universities would offer such a program in journalism, I’d sign up for it in a heartbeat. Unfortunately, for now, I’m resolved to my fashion blog. Dahlia, “Investigative Fashion Journalism,” Dualité, July 7, 2008, accessed May 16, 2011.
Exercise \(3\)
1. “Part of the fun,” she writes, “is being your own detective by trying to dig up evidence, to see what the big cover up is about.” Is there a connection between “fun” and meaningful work? Where does fun fit in the consideration of values to be weighed when considering a career track?
2. What career-related values do you suspect light up Dahlia and, more generally, the kinds of people who try to make up jobs for themselves?
3. Ethically troubling exploitation in the fashion industry.
• Do you think she thinks there’s exploitation in the fashion industry? Where?
In January 2009, the woman known as Octomom gave birth to octuplets. Her real name is Nadya Suleman; she’s a single mother who’d split from her husband because they were unable to have children together. She was on welfare when she conceived the children via in-vitro fertilization. She already had six young ones at home.
All her children were implanted by Dr. Michael Kamrava.
The delivery required forty-six doctors, nurses, and attendants.
In 2009, she was offered \$1 million to star in a pornographic movie. She refused, but later that year she signed a contract for each of her children to earn \$250 a day to star in a reality show.
If there is exploitation—if something ethically reproachable is going on—what’s her relation to that blemish? Is she guilty too? Explain.
Octomom
Source: Photo courtesy of Todd Huffman, http://www.flickr.com/photos/oddwick/1954905403/.
In January 2009, the woman known as Octomom gave birth to octuplets. Her real name is Nadya Suleman; she’s a single mother who’d split from her husband because they were unable to have children together. She was on welfare when she conceived the children via in-vitro fertilization. She already had six young ones at home.
All her children were implanted by Dr. Michael Kamrava.
The delivery required forty-six doctors, nurses, and attendants.
In 2009, she was offered \$1 million to star in a pornographic movie. She refused, but later that year she signed a contract for each of her children to earn \$250 a day to star in a reality show.
Exercise \(4\)
1. Make the ethical case that a nurse should not seek employment in the office of Dr. Michael Kamrava, even though he pays well.
2. Justify a nurse’s decision to work in the office of Dr. Michael Kamrava, because he pays well.
3. What alignment of work-related values may have led Nadya Suleman to reject work as a porn star but accept the role of reality TV actress (along with her many children)?
Paralegal or Lawyer
Source: Photo courtesy of Tami Vroma, http://www.flickr.com/photos/32314864@N02/3253051215/.
Sally Kane, an attorney and writer, drew up a list comparing the practical realities of two careers, paralegal and lawyer. Here’s a summary:
Paralegal: A few months training.
Lawyer: A few years of school after college.
Paralegal: Low-cost education.
Lawyer: Law school is EXPENSIVE.
Paralegal: Earning limit under \$100,000 in most markets.
Lawyer: The sky.
Paralegal: A paralegal now is pretty much a paralegal forever.
Lawyer: Working as a lawyer opens doors to other careers.
Paralegal: One of the fastest-growing careers in United States.
Lawyer: Job outlook above average.
Paralegal: Limited responsibility and stress.
Lawyer: High responsibility and stress.
Paralegal: Overtime pay.
Lawyer: If there’s work until 11 pm, you work to 11 pm.
Paralegal: Once you’ve got the job, no more school.
Lawyer: You need to keep updating your knowledge (every year, if you’re a tax attorney).
Paralegal: Shorter learning curve, and your work is routine and mundane.
Lawyer: Long learning curve, and your work is intellectually challenging and varied.
Paralegal: Cubicle.
Lawyer: Private office. Sally Kane, “Should You Become a Paralegal or Lawyer?,” About.com, accessed May 16, 2011, http://legalcareers.about.com/od/legalcareerbasics/a/paralegallawyer.htm.
Exercise \(5\)
1. This comparison is a list of facts. Can you go through the list and attach ethical value to the facts? In terms of what value(s) does each fact make a job more or less desirable?
• Make the ethical case that it’s better to go the paralegal route.
• Make the ethical case that it’s better to go the lawyer route.
2. If you’ve developed a short list of career options, can you go through and make up a sort of career decision spreadsheet that resembles the one just constructed for lawyers and paralegals? It would list the two or three jobs you’re considering. Then one column would list the factual advantages and disadvantages of each one, things about vacation time, salary, working conditions, and so on. Finally, there’d be your unique part: the notation of which of those facts held value and importance in your life and with respect to the role you imagine work to have for you in the coming years. | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/05%3A_Employee's_Ethics-_What's_the_Right_Job_for_Me/5.03%3A_Case_Studies.txt |
Chapter 6 examines some ethical decisions facing employees. It considers the values that underlie and guide choices about how you go about getting a job, how you maneuver for a better one, and what the right moment is for leaving.
06: Employee's Ethics- Getting a Job Getting a Promotion Leaving
Learning Objectives
1. Define ways job seekers may misrepresent themselves on a résumé.
2. Construct an ethical framework for managing the dilemmas of crafting a résumé.
Robert Irvine’s Stretched Résumé
For many job seekers the first—and maybe the only—chance they get to impress a potential employer is a résumé. What are the ethics of presenting your qualifications on a sheet of paper?
Robert Irvine is a muscled chef from England who you may have seen hosting the Food Network’s popular Dinner: Impossible. It’s a good job. The TV show generates free publicity for his cookbook Mission: Cook! and affords him the kitchen credibility to open his own restaurants. That was the idea he brought to St. Petersburg, Florida, in 2008. His concept for south Florida, actually, was two restaurants: Ooze and Schmooze. Ooze was going to be the accessible, entry-level place and Schmooze the highbrow complement. His biography—the summary of his professional life and experiences that he presented to potential investors—was impressive. According to the St. Petersburg Times, he advertised his résumé as including:
• A bachelor’s of science degree in food and nutrition from the University of Leeds.
• Royal experience working on the wedding cake for Prince Charles and Princess Diana.
• He was a knight, as in Sir Robert Irvine, Knight Commander of the Royal Victorian Order, handpicked by the Queen.
• For several consecutive years, he’d received the Five Star Diamond Award from the American Academy of Hospitality Sciences.
• He’d served as a White House chef. Ben Montgomery, “TV Chef Spiced Up His Past Exploits,” St. Petersburg Times, February 17, 2008, accessed May 17, 2011, www.sptimes.com/2008/02/17/Southpinellas/TV_chef_spiced_up_his.shtml.
Everything came to an end, though, at least temporarily, when Food Network fired him for résumé lies. Here’s the truth about the listed items:
• The claimed BS degree? According to a press officer at the University of Leeds, “We cannot find any connection in our records between Robert and the university.”
• The royal wedding cake? Well, he did help pick some of the fruit that went into it.
• The knighthood? No.
• The Five Star Diamond Award? True, but it’s not the AAA’s prestigious Five Diamond Award or Mobil’s five stars. The American Academy of Hospitality Sciences is actually a guy’s apartment in New York, and the award is granted to anyone who pays a fee.
• White House chef? Kind of. But he didn’t prepare sophisticated dishes for the president or anything like that; he cooked food for the cafeteria line, serving military workers at the White House.
Certainly, Robert Irvine isn’t the first guy to stretch his résumé, but he does an excellent job of exploring the many ways people can misrepresent themselves when trying to get a job. Generally, there are two kinds of résumé abuses. Positive résumé misrepresentations are those items on a résumé that simply aren’t true. Examples include:
• False credentials. These are certificates of accomplishment that don’t exist. Irvine said he had a BS degree. He didn’t. This kind of misrepresentation is especially tempting for job seekers who didn’t quite finish their degree. One of the obvious practical problems is that claims like this can be verified or disproven by human resource departments. (Or, as in Irvine’s case, by enquiring newspaper reporters.)
• False experience. Untruthfully claiming to have participated in projects. Irvine asserted that he’d been a White House chef, meaning he’d planned sophisticated menus and prepared dishes for dignitaries. He didn’t. He cooked assembly-line food in the cafeteria for White House staff workers.
• Embellished experience. This is the easiest kind of résumé misrepresentation. Irvine really did work on the royal wedding cake, but only picking fruit, not actually making it. His claim, therefore, isn’t directly false, but incredibly misleading. The same could be said about the Five Star Diamond Award. While technically true, it’s not the meaningful award that people imagine it to be.
• False chronology. Anyone who’s suffered long periods of unemployment—or just been fired from a job and taken a while to find another one—has surely been tempted to adjust the dates on their résumé to make it seem as though they went smoothly from one post to another.
• False references. Listing someone to vouch for your experience who really won’t or can’t. Irvine said he’d been selected by the Queen of England for a knighthood. It never got to the point where someone actually called her to ask, but if they would’ve, she would’ve drawn a blank. Of course people don’t normally list royalty as a reference, but in everyday life, it’s easy to commit the same misrepresentation. One fraternity brother could list another as a former boss. A woman could list a brother-in-law.
Negative résumé misrepresentations are those items that would appear on a complete résumé, one listing all your working experience, but that conveniently get left out of the one you submit to a potential employer. If you were fired from your first job at McDonald’s years ago because you kept forgetting to take the fries out of the oil pit, no one’s going to object when you drop those months off your work history. On the other hand, if, up until two months ago, you were in charge of the vehicle fleet for a hotel, and you were fired for taking your girlfriend out in the company limo after hours, leaving that off your résumé is misleading new prospective employers.
In the case of Irvine, things worked out for him in the end. After he publicly recognized the truth and cleaned up the most outrageous resume claims, he got his TV show back.
The Ethics of Stretching the Résumé
It’s hard to define all the ethical lines dividing what should and shouldn’t be included in a job applicant’s résumé, but steps can be taken to control the situation. If you’re sitting at your desk trying to figure out whether there should be any deleting, fudging, or exaggerating, two questions can help get a hold of the situation:
1. Who will be affected by my decision?
2. Does it matter what everyone else is doing?
The first person affected by your decision is you, and everyone’s closest ethical responsibility is the one they hold to themselves, the responsibility to respect their own dignity and abilities. One way of taking that responsibility seriously is to look back at the jobs you’ve held and ask what kinds of tasks they entailed and how those experiences and the skills taken from them might be stated in a broad and appealing way. Probably, Irvine went overboard when he translated the fact that he’d chosen fruit included in a royal wedding cake into the claim that he participated in assembling and cooking it. But it also seems like it’d be a mistake to say that he’d been a simple “fruit picker” on a wedding cake job. In the culinary world, his was important fruit picking. Irvine’s mistake, in other words, wasn’t that he tried to make himself look good, it’s that he couldn’t find a way to do it without essentially lying about his experience.
The duty to present yourself positively to potential employers may also justify the decision to leave certain, let’s say, unfortunate aspects of your professional life off the résumé. Irvine doesn’t talk much about how his endeavor to create restaurants in St. Petersburg fell apart in a sorry mess. If tomorrow he goes out and tries to stir up investors for a new pair of restaurants somewhere else, he has an obligation to be honest with them about what happened last time. But if he’s looking for a job as a TV cook, or just as a cook in a restaurant, then he may be able to justify leaving that bad episode unmentioned. The reasoning? The fact that he’s bad at mounting restaurants doesn’t mean he’s a bad TV personality or an error-prone cook. The one job has little in common with the others. So if he’s applying to be a cook, he could possibly leave the negative information about his other business ventures out based on the idea that it’s simply not applicable to the employment being sought.
The duty to yourself, finally, points toward a résumé presentation that sets your accomplishments and skills in boldface while not dwelling on extraneous shortcomings.
Another person affected by your résumé decisions—the choice about how much truth to tell and hide—is the person doing the hiring. If you claim experience you don’t really have and skills you don’t possess, the supervisor who oversaw your contracting won’t just be disappointed and angry as he watches you stumble and trip over tasks that should be easy. The botched hiring will also reflect negatively on him when superiors evaluate his performance and make decisions about pay raises and promotions. He’s going to suffer because you lied. There is, in other words, a loser when you scam to get a job that you’re not really qualified for. More, that harm accrues to the company as a whole. Maybe costs will increase because more training than expected will be necessary. Maybe an account will be lost when you fumble an assignment that should be automatic.
Your potential future workmates also have a stake in your application for a job. If you claim, as Irvine did, to have worked on the Charles and Diana wedding cake, it seems fair for your boss to assume you’ll be able to manage producing first-rate cakes for ordinary people. If you can’t, if you have no idea how to serve up even a simple layer cake, someone else on the team is going to have to step in and do your work for you. They probably won’t get your paycheck at the end of the month, however.
Other applicants for a job also have a stake in your own application. It’s a competitive world, and while you’re the one who can best make the case for your ability, making false claims doesn’t just give you an opportunity you may not otherwise receive: it takes an opportunity away from someone else.
What’s Everyone Else Doing?
The first step in getting control of your résumé’s relation with the hard truth is working through how any particular decision affects those involved. The second step is determining whether it matters what everyone else is doing. The question is important because applying for jobs doesn’t happen in a vacuum. If everyone stretches their qualifications to the extent Irvine demonstrated, then obviously you may want to consider whether you need to do the same just to get a fair shake.
A web page with a very truthful URL, Fakeresume.com, takes up the question about how much fibbing is going on out there. Under the heading “The UGLY Truth About How People Are Outsmarting You!” they assert,
Over 53% of job seekers lie on their résumés. Over 70% of college graduates admit to lying on their résumés to get hired. Can you afford not to know the techniques, tricks and methods they use? Fakeresume.com, accessed May 17, 2011, http://fakeresume.com.
Fair question. Of course no one knows exactly how much cheating goes on, but as Irvine attests, there’s definitely some out there. So should you get in on it? The argument in favor roughly corresponds with the web page’s pitch. If everyone’s doing it—if exaggeration is expected—then employing the same misrepresentations that guide everyone else isn’t really lying. Like driving sixty down a fifty-five-miles-per-hour highway when all the other cars are going that fast too, your exaggerations are following the rules as everyone seems to understand them. From this point of view, you may even have a duty to exaggerate because not doing so, as the web page claims, isn’t being an ethical hero, it’s just being outsmarted. And in a competitive environment, you at least have the moral obligation to not let yourself be snookered.
On the other side, where do these percentages—53 percent, over 70 percent—come from? The web page doesn’t say, and if they’re not true, then doesn’t the whole argument—do it because everyone else is doing it—reduce to an excuse to lie?
In the case of Fakeresume.com, it couldn’t be more obvious what’s going on. The site is offering you a way to not tell the truth and not feel bad about it. Instead of offering moral guidance, it’s inventing a way for you to justify taking the easy path, to justify padding the résumé without having to consider whether that’s the right thing to do.
Conclusion. In the midst of résumé-stretching dilemmas, what other people are doing matters. Hiring is relative; there’s hardly anyone who’s perfect for any job, recruiters take the applicant who’s best suited. Your obligation—to yourself and to the recruiter—is to show why you may be the best suited of the applicants. That may mean (using the language of Fakeresume.com) using the résumé-enhancing techniques commonly employed. It doesn’t mean, however, just imagining that everyone else is lying their pants off and then using that as an excuse to lie yourself.
Résumé Verification and the Law
One problem Robert Irvine faced was his very public personality. To stir up interest in the restaurants he planned for St. Petersburg, he had to stir up interest in himself. All the commotion drew the attention of a local newspaper reporter who ended up blowing the whistle on the résumé exaggerations and concoctions.
More ordinarily, job applicants don’t need to worry about reporters prying into their claims. Most medium and larger companies do, however, pass résumés through human resources departments and they typically confirm the significant, objective claims of job seekers. Items like degrees obtained can typically be verified. So too dates of previous employment and job titles. Every company will follow its own internal guidelines, of course, so it’s impossible to make a table listing the misrepresentations that will and won’t slip through, but it’s certain that objectively false information may come to light sooner or later.
If false information does come to light, are there legal complications? Probably not. Because résumés aren’t binding, signed agreements between the applicant and employer, they’re generally protected by free-speech guidelines. In the case of Irvine, if he claimed he was Superman, there’s nothing the police could do about it. That said, efforts have been made to take some action against the most extreme cases of résumé misrepresentations. A number of legislative measures have been proposed to punish those who lie about a military record and honors received. Also, in Washington State in 2006, legislation was advanced to fine and briefly imprison applicants found guilty of claiming advanced degrees they didn’t actually earn. The measure ultimately failed. Candace Heckman, “Lying on Résumé Could Land You in Jail,” SeattlePI, March 3, 2006, accessed May 17, 2011, http://www.seattlepi.com/local/261747_diplomamill04.html.
Conclusion. Most résumé misrepresentations don’t cross into illegality. This is one of those areas in the business world where legal right and wrong diverges clearly from ethical right and wrong.
Ethical Egoism and Résumé Misrepresentations
Ethical egoism means your moral responsibility is to act in your own interest no matter what that may require. This provides a license for outright résumé invention (a false BS degree and imaginary knighthood for Irvine). But, as is always the case with egoism, the question must be asked whether job seekers really serve their own interests when they claim things that may later be revealed to be false or when they land jobs they later won’t be able to perform because their qualifications were fake.
One specific warning for the egoist comes from the admissions department at the Massachusetts Institute of Technology. One of the world’s elite universities, the task of selecting each year’s freshman class is as daunting as it is important for a school dedicated to preserving its reputation. The head of that office in 2007 was Marilee Jones. One of her central skills was the ability to distinguish high schoolers who’d truly excelled from those who got great grades by taking easy classes. Her widely admired skill, in other words, was filtering out grade sheets (which are students’ résumés) that misleadingly stretched the students’ classroom accomplishments. She went on using that skill until it was discovered that twenty-eight years earlier, when she’d first applied to work at the school, she’d invented a few degrees for herself. She was fired on the spot. Marcella Bombardieri and Andrew Ryan, “MIT Dean of Admissions Resigns for Falsifying Resume,” Boston Globe, April 26, 2007, accessed May 17, 2011, www.boston.com/news/globe/city_region/breaking_news/2007/04/mit_dean_of_adm.html
Key Takeaways
• There are multiple kinds of positive résumé misrepresentations and negative résumé misrepresentations.
• Managing the dilemmas of crafting a résumé requires accounting for obligations to all those who will be affected by the résumé.
• Circumstances involving the specific post being sought, along with commonly accepted practice, may determine the extent to which misrepresentations are ethically objectionable.
Exercise \(1\)
1. Who are the people affected by résumé truth decisions?
2. What are five distinct ways you may choose to misrepresent yourself on your résumé?
3. What’s the difference between legal and ethical approaches to the question about padding the résumé?
4. Why might a job seeker have a duty to blur parts of his or her work history?
5. Why might an egoist lie on the résumé, and why not? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/06%3A_Employee's_Ethics-_Getting_a_Job_Getting_a_Promotion_Leaving/6.01%3A_The_Resume_Introduction.txt |
Learning Objectives
1. Distinguish the free market from other methods for determining a just salary.
2. Consider the justification of wage demands.
Bogus Job Offer Converted into a Real Raise?
In her blog FemaleScienceProfessor, the author considers a problem. She’s got a lab research assistant whom she calls postdoc, which presumably means he got his PhD, but he’s still hanging around the university and working for low pay. She wants to give him a raise. The higher-ups, however, won’t approve it. So she writes,
I’m pretty sure I could get a colleague at another institution to send my postdoc an e-mail expressing an interest in hiring him away from my institution (but without any real intention of doing so). With such a letter in hand, there’s a good chance I could get the raise approved. Ethical? No. Should I do it anyway? “Proposed Ethical Lapse,” FemaleScienceProfessor (blog), July 1, 2009, accessed May 17, 2011, http://science-professor.blogspot.com/2009/07/proposed-ethical- lapse.html.
Actually, the ploy may be considered ethical within a purely market-driven framework for setting salaries. Cutting the details and reducing to the situation’s essence, the worker is in effect threatening to not show up for work anymore unless there’s a larger paycheck. That means the employer is being forced to determine if the employee is worth the extra money. The answer will follow from a survey of available workers in the market, and an answer to the question as to whether another can be found to perform the same duties equally well without demanding more pay. If not, then the increase will probably be granted. If a replacement can be found, then things will get awkward as the lab assistant tries to walk back his threat. The walking back is an etiquette problem, though, not an ethical one. From this perspective, in terms of ethics, all that happened is the worker tried to get a raise and didn’t.
Obviously there’s a loose end here; there’s the question about whether the lying is ethical. It depends. Placing the question in the context of organized labor, is it ethical for a union organization to bluff, to say they’ll go on strike while knowing they really won’t? What about less direct lies? An employee that’s actually satisfied with her salary may feign unhappiness in order to squeeze out a little extra. Further, almost all hard-nosed business negotiation entails a bit of posturing. Not many cars have been sold without the seller at least initially insisting, “Well, I can’t possibly go below x price for this fine automobile.” And then, after a visit with the manager or some other contrived breakthrough, the seller decides, “Well, in this special case, maybe I can do a little better.”
In one form or another, a pure market economy occasionally (or maybe frequently) reduces to both sides insisting that they can’t pay more or give less, and in the end, both sides meet somewhere in the middle. As for the previous claims about other jobs or threats to go on strike or insisting that the price can’t possibly come down or whatever, all that washes away when hands finally shake.
The ethical foundation undergirding and justifying participating in business this way is libertarian in nature. It starts with the premise that we’re all independent actors out in the business world trying to accrue the most for ourselves, and others are out to do the same thing. We all know the rules, we’re all adults. When we negotiate a pay raise, we may exaggerate circumstances or say some things that aren’t true. But at the end of the day, no one forces the employer to pay more; it’s the employer’s choice. As for the employee, the empty threat to leave may be presented at the bargaining table, but it’s not so much a lie as a commonly used negotiating technique, just a way of upping the pressure. It is, therefore, ethically acceptable to invent another job offer but only within the confines of business negotiating and only because everyone knows the give-and-take happens that way.
There is another side to this, however. If you don’t accept that negotiating in business is a kind of special-rules game where posturing and exaggerating are customary, then you may want to argue that talking about salaries isn’t any different from any other kind of conversation. If it’s not, then the ethical argument against leveraging an imaginary job offer to force a pay raise finds a solid foundation on the bedrock duty not to lie regardless of the circumstances. For anyone who begins from the ethical foundation that any morally acceptable act must not breach certain ironclad principles—don’t lie, don’t steal, and similar—it becomes impossible to justify making up a nonexistent job offer, even if that’s the way the game of business is being played by others.
The Role of the Larger Community in Determining Wages
There are two broad ways to get a fix on your own economic worth. One operates within the open market: economic free agents meet and sessions of no-holds-barred negotiations result in an answer. The other broad approach to setting wages places the issue within the context of a larger community. Here, it’s not so much that we’re bargaining individuals dealing to get the best possible result; instead, we’re part of a business organization and a larger society, and wages get distributed across it in accordance with guidelines and norms. There are multiple kinds of guidelines. They include
• my value to the organization,
• the ability of the organization to pay,
• the community wage level,
• the wages paid to other employees in the organization,
• my experience and seniority relative to others in the organization,
• the future jobs a post may prepare me for.
Trying to determine what a fair salary would be for postdoc in terms of his value to the organization requires determining how much of the organization’s profit he actually produces. A researcher in a science lab may, under this system, labor for years without any pay at all if his investigative work fails to produce a marketable product. On the other hand, if after years of labor his research finally yields a breakthrough, his wages conceivably shoot to astronomical levels.
Needless to say, this wage-determining structure won’t work very well for lab researchers or for any kind of job that requires years of labor before any return may be anticipated. It does function, however, for businesses like American Apparel. They pay their clothing sewers a small base wage, and then a large secondary amount that rises or falls depending on their output, on the number of garments they add to the inventory. In essence, each week workers bring home a paycheck corresponding with the value they’ve added to the company. That means the relation between the sewers and American Apparel is fundamentally cooperative; it’s not a worker negotiating against the organization but the two laboring together and splitting the fruits of the efforts. Nick Schou, “The Low Cost of High Wages,” American Apparel, OC Weekly, December 28, 2005, accessed May 17, 2011, http://www.americanapparel.net/presscenter/articles/20051228ocweekly.html.
Another broad context into which the wage question may be fitted is the organization’s ability to pay. A lab assistant may choose, for example, to accept a pay cut to help the firm weather a period when no one seems able to invent anything that can be sold. The hope would be that, later on, when someone finally gets that breakthrough and profits zoom, everyone’s wages will shoot up too.
A third context for setting wages is the community wage level. Going back to American Apparel, their Los Angeles factory pays workers more than twice the US minimum wage, plus benefits. That’s not a lot of money for California, but it’s ten times more than what sewers in countries including China make for similar work, which doesn’t mean, within this context, that those overseas workers are being abused, only that salaries should be comparable with what others in the immediate area make. Two employees may receive, therefore, radically different paychecks for the same work, but that’s ethically appropriate if the wage levels are initially set to correspond with local costs of living and standard practices.
Organizational wage level is another way of standardizing employee pay. In this case, a lab researcher would base demands for a raise on the argument that others working in the same lab are being paid more than he is. It doesn’t matter, it follows, how much researchers are being paid at other, competing locations. They may receive more, or possibly less. Regardless, the standard is set within that single organization, and people with comparable experience doing comparable work should receive similar checks.
Seniority relative to others in the organization also provides a salary framework. Here, the emphasis doesn’t rest so much on abilities or contribution to the organization, it’s the amount of time an employee has been doing it that counts most. In a research lab like the one FemaleScienceProfessor is blogging about, her assistant’s demand for a raise would be based on the idea that he should be getting more than those hired after him, and less than those who’ve been employed longer. There’s a comforting sense of fairness here as the wages get aligned with factors that aren’t subjective; it’s much easier to tally an employee’s time working than to determine how much he might get paid elsewhere or measure his exact contribution to the organization. One drawback to this approach is that it allows little room for rewarding exceptional ability or effort. Potentially, the only reward an employee receives for working more efficiently than others is that he gets more work to do.
This particular drawback to a seniority system for determining wages is called a perverse incentive; it’s a system of rewards that actually encourages workers to perform poorly or inefficiently. Take the case of American Apparel’s sewers and imagine that wages were determined solely based on the length of their employment. Sewers would have little reason to produce more garments than their workmates. They may even feel like their main task at work each day is to find as many ways as possible to rest and not do anything. Why not? Their wages won’t be affected. Obviously, in most private enterprises, slackers like these find themselves out of a job. But in sectors where firing individuals is extremely difficult—government jobs being a prime example—a seniority system for setting wage levels threatens to incentivize glum, nonresponsive employees.
Finally, pay may be calibrated by the future prospects the post creates. Here, the lab assistant may complain about low pay, but the response may be that the particular lab where he’s working is quite prestigious, and gaining experience there will allow an advantage against other candidates when he goes out to find employment elsewhere later on. The wages lost now, the reasoning goes, will be more than recouped in the future.
An extreme form of this future-prospects salary structure is an internship. This is a short-term job with little pay and few benefits. Sometimes, there’s no pay at all. The upside is the experience. When it’s added to the résumé, it should make a job seeker more attractive to employers. If everything works, the time may be a good investment, a good way to get into a line of work, or get in at a higher level. The ethical problem, however, lies in the possibility of abuse that’s unavoidable when someone is working essentially for nothing. Here’s a snippet from an entry on Craigslist:
I agree that calling work for no pay an ‘internship’ is just a fancy spin for disrespecting the talents and the person being ‘used’. Unfortunately, in this society…many people think it’s ok to offer no pay for legitimate work.Craigslist San Diego, “Comments RE: internship posts& low pay,” January 5, 2010.
He might be right. This complaint is definitely right if the organization offering the internship knows beforehand that the worker’s prospects in the market won’t really be improved by the experience acquired. In that case, it seems like an internship really is just a “fancy spin for disrespecting the talents and the person being used.”
There are two kinds of questions to ask about a worker who’s laboring for low (or no) wages with the idea that the experience will pay off in the long run. The first involves employers implying there’ll be improved job prospects while knowing there probably won’t be. The other is more prudential: assuming the employer is acting in good faith, the worker still needs to ask, “Is it worth it?” It’s impossible to know the answer beforehand, but by making the best judgment possible you can get a grip on the question about whether a higher wage ought to be demanded.
Conclusion. For employees trying to measure their worth in business—how much they ought to be paid for their work—the guiding question is, “What are the criteria used to measure whether a paycheck is too fat or too lean?” Are wages set by the market, or is it my value to the organization or something else that determines the pay scale?
Key Takeaways
• An appropriate salary level may simply be the result of the hardest negotiating possible, or it may be determined by broader guidelines.
Exercise \(1\)
1. How can an employee ethically justify inventing a job offer in order to pressure the boss into granting a raise?
2. From the employee’s perspective, in what line of work might value to the organization function not very well as a gauge for setting salary levels?
3. How could a company justify paying accountants in its St. Louis office less than accountants in the New York City office?
4. From the employee’s perspective, in what line of work might experience and seniority function well as a gauge for setting salary levels?
5. Does an employer have an ethical responsibility to offer an intern a job at full pay once the internship is successfully completed? Why or why not? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/06%3A_Employee's_Ethics-_Getting_a_Job_Getting_a_Promotion_Leaving/6.02%3A_What_Am_I_Worth.txt |
Learning Objectives
1. Distinguish two job promotion tracks.
2. Define ethical responsibilities of those seeking a job promotion.
Two Kinds of Job Promotions
Two major promotion tracks run through many organizations: one based on accomplishment, the other on competition. Accomplishment promotions are those scheduled for workers attaining specific, predetermined goals. For example, in an office of stockbrokers those who achieve a certain number of clients or reach a level of total investment money under their direction may automatically be elevated. An account executive could become a vice president of accounts after she’s gathered more than ninety-nine clients or has garnered accounts valued at more than a million dollars. Along with the new title, there may come a pay raise and additional benefits.
The ethical questions rising around this system are fairly straightforward and tend to involve transparency—that is, a clear explanation of the rules and rewards from the beginning. Does it count, for instance, if a broker games the system by signing up one hundred clients who each invest only piddling amounts? That could lead to a system where a vice president oversees one hundred clients but only \$500 of assets, while a lowly account executive labors with ninety clients and \$900,000 in assets.
Every industry and organization will have its quirks and ways of twisting the numbers to make things appear better (or worse) than they really are. Keeping those angles under control is a manager’s concern, however. Establishing a level playing field, that’s the kind of thing managers are paid to take care of, and the dilemmas surrounding this subject will be considered from their perspective in later chapters. From the employee’s perspective, there aren’t many problems: if the goals are set, then you have every right to try to meet them as best as you can to get the step up.
The stickier ethical territory comes with competitive promotions. These are situations where workers within a group aren’t only teammates laboring to reach the organization’s goals but also competitors vying for that one slot that comes open on the hierarchy’s next level up. In this situation, what are the ethics of trying to get the promotion?
Dirty Tricks
Colin Gautrey has written a book with a captivating title: 21 Dirty Tricks at Work. In a short article, he summarizes two of the most commonly used by stealthy promotion seekers to either inflate themselves or sabotage their coworker competitors.
• The creative magpie. This time-honored strategy of self-service is exaggerating involvement in successful ideas—or flat out stealing credit for them—while steadfastly forgetting to mention others’ contributions.
• E-mail to the gods. A contemporary and clever scheme for ruining your colleagues’ advancement chances, it entails writing an e-mail incidentally detailing a colleague’s work-related failure and “accidentally” copying the message to supervisors and clients. Colin Gautrey, “Dirty Tricks at Work—Five Ways to Protect Yourself,” EzineArticles.com, accessed May 17, 2011, ezinearticles.com/?Dirty-Tricks-at- Work---Five-Ways-to-Protect-Yourself&id=2703788.
The business of getting a promotion, if Gautrey’s tricks are any indication, can get pretty rough. One way to determine what you’re willing to do is by separating and looking at each one of the ambitious worker’s ethical responsibilities with respect to self-advancement. In broad strokes, those seeking promotion at the cost of others in their work group are located at the center of four responsibilities: those to
• themselves,
• their coworkers,
• their managers,
• the organization in general.
The Four Responsibilities
What do ambitious employees owe themselves? Most ethical theories encourage those who desire to advance at work to go after the success. Duty-based ethical structures, for example, include the responsibility all of us should have to respect our own skills and dignity, and if professional excellence is among them, then there’s a responsibility to excel, to do well at work. So if getting the promotion requires acting to be sure superiors know when you’ve done a good job—and in competitive environments it does—then there’s a moral imperative there to act, to ensure that credit is received. There’s no shame, in others words, in at least discreetly blowing your own horn. Of course there’ll always be people in the workplace, perhaps this is even the majority, whose ambitions for their lives aren’t about professional success so much as having a fulfilling family life or pursuing an after-five interest. For these individuals, just avoiding the whole career advancement race—even if it means getting less money at the end of the month than others—makes perfect sense.
What do ambitious employees owe their workmates? To begin, the same ethical framework of duties requiring individuals to respect their own ability and dignity also demands that much for others. So while it may be that singing your own praises and advertising your accomplishments as the creative magpie does is respectable, it’s harder to justify obscuring the accomplishments of others. Further, if the respect for yourself is balanced by the same respect for others, it seems like there’s an obligation to actively ensure that superiors are aware of not only your own contributions but also those made by another. There is, in essence, a good sportsmanship rule in effect. (And certainly, any ethics functioning from a base of respect for ourselves and others will prohibit the outright stealing of others’ ideas and accomplishments.) On the other hand, an ethical egoist—someone insisting that individuals are free agents and the world will work out for the best if everyone steadfastly pursues their own interests—will see things somewhat differently. From this point of view, the responsibility to trumpet the accomplishments of others falls to those others. If they want to claim credit for a job well done, they may, but if they don’t, it’s no one else’s responsibility to do it for them. Finally, what’s important to see is that there are different intermediate points between trumpeting your own accomplishments and claiming the accomplishments of others as your own. Acting ethically requires determining which point you’re at and justifying the stance.
The responsibilities workers hold to their superiors start with honesty. The basic problem with the creative magpie strategy on this ethical front is that it means passing on to managers misleading or false information about who contributed how much to a project. This affects managers negatively—potentially very negatively—because next time something needs to get done urgently and at the highest possible level, they may not aim the assignment at those employees most apt to produce the best results. Their performance as a manager, it follows, will be adversely affected when the work performed under their direction comes in at a quality level below expectations. The career prospects of a manager, finally, will be hindered when a subordinate sacrifices honesty in the attempt to advance his or her own career.
The last responsibility that employees looking to be promoted ought to consider is their obligation to the organization in general. Here, both the magpie strategy and the e-mail to the gods trick raise serious questions. The worker’s central obligation to the organization is to help it flourish: they’re being paid to help the enterprise reach its goals. The problem with the magpie strategy on this front is the same as the problem experienced by managers. When workers who do the best work see the credit stolen by others, the organization loses some of its ability to produce at the highest possible level. Moving on to the e-mail to the gods strategy (the appending of harmful information about other workers to e-mails and then seeing that clients receive the information), this is especially damaging. Even if the information is true, and should perhaps be shared with managers inside the organization, it’s nearly impossible to see how any organization can benefit when clients find out the work being done is substandard.
Conclusion. For ambitious employees looking to advance quickly in a situation where they’re competing against their own coworkers, the recipe for success is obvious: get credit for doing better work than the others. One way to accomplish that is to actually do better work and make sure superiors know about it. There are other ways too. Navigating the ethics of those ways requires workers to carefully evaluate their obligations to themselves, their coworkers, their managers, and their organization.
Key Takeaways
• Accomplishment promotions and competitive promotions are distinct and occur on different ethical terrains.
• Those pursuing competitive promotions ought to consider their responsibilities to themselves, their coworkers, their managers, and their organization.
Exercise \(1\)
1. Who is hurt by the creative magpie strategy and in what specific ways?
2. You’re working on a project with another worker and he’s not doing well. His contributions need constant correction. Does your obligation to the organization’s well-being provide ethical justification for informing superiors about the shortcomings? Does the ethical situation change if you’re also competing with that workmate for a promotion? If it changes, how and why? If not, why not? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/06%3A_Employee's_Ethics-_Getting_a_Job_Getting_a_Promotion_Leaving/6.03%3A_Plotting_a_Promotion.txt |
Learning Objectives
1. Consider ethical dilemmas confronting employees as they move from one organization to a competitor.
Ethical Issues along the Way to a New Job
Most people who leave one job for another make the transition smoothly; they learn of a new position, apply, interview, and win the post. Notice is provided to the current employer. The split is amicable. Everyone goes forward. On some occasions, however, ethical turbulence occurs because obligations to the current employer are broken along the way out. These are some of the most commonly encountered flashpoints:
• Time abuse. The use of company time to seek another job.
• Equipment-use abuse. Using the firm’s equipment as part of the effort to find a job elsewhere.
• Skill theft. Taking specific, job-related abilities acquired at one company to another.
• Client adoption. Moving to a new company and helping it appropriate part of the former company’s client base.
• Market adoption. Moving to a new company and helping it appropriate part of the former company’s market.
• Idea appropriation. Taking ideas belonging to the old company to the new one.
Musical Chair Stockbrokers
Successful stockbrokers share some basic skills. One is the ability to manage reams of information about diverse investments. The options they need to organize run from humdrum treasury bills, which are safe investments but don’t earn very much, to stock in companies like Google, which first went on sale in 2004 at a price of \$85. By 2007, that same share cost more than \$600. Other start-up companies also began selling shares in 2004, but it’s harder to remember their names since they went broke. Now it’s not the stockbrokers’ job to determine which investments are reliable and which more explosive; that’s handled by specialized analysts. What stockbrokers do is arrange the possibilities into clear groups of more and less speculative investments, then they provide options to their clients.
Talking and helping clients choose good options is another key stockbroking skill. To do that, brokers need to understand clients’ situations and aspirations. If you’re a young client with some extra cash, you may want to take a risk. But if you’re nearing retirement, you may figure it’s best to play it safe. Regardless, the stockbroker-client relationship tends to be fairly sticky once it’s fully established because they’ve spent real time talking seriously: to help their broker work, clients need to open up about themselves, their current reality, and their hopes for the future. After that, it’s difficult to just switch out of the relationship.
How do stockbrokers make money? They get a small percentage of every investment they oversee, and the larger brokerage firm, say, Smith Barney, gets a cut too. At least that’s the way it works on a day-to-day basis. There is, however, another option for brokers, at least for ones who’ve accumulated a good, trusting client list. They can switch firms for money. For a lot of money because brokerage houses fall over themselves rushing to offer large signing bonuses to those employees who can bring a long client list with them.
After a deal to jump to another brokerage house has been struck, the stealth begins. One way or another, the broker needs to get his or her client files. It’s a delicate operation; computers in most brokerages don’t have USB drives, so you can’t just pull the information off the hard drive. You’ve got to print it all out or find some way to access the mainframe with a thumb drive. Regardless, brokers need to get those files because they hold each client’s investment history and notes brokers use to remember their clients’ stories, their family members, and all the little things that make the personal relationship work.
With the client information in hand, the broker prepares for the nail-biting day of the actual switch. A letter is written to clients (though not yet sent) reporting the broker’s move to the new firm, and explaining why it’s a good change—or just not bad—for the clients’ interests. Instructions and the necessary forms are included for clients to transfer their accounts easily and fast. The day before the change, the letters are delivered to the central post office. The next morning, the broker resigns and hurries out of the office. With the first step outside, she hits the call button on her cell phone. A long and frantic day has begun: starting with the largest investor and running down the list, she telephones to explain what’s happening, and to ask each client to stick with her through the switch.
Back at the old office, intense damage control begins. The manager rushes to divide up the ex-worker’s client list among the remaining brokers, and they start phoning, pleading with the clients to stay with the old, reliable firm.
Usually, most clients go.
For the moment, that’s the end of it. But the switching will fire up again because a brokerage house that’s lost a rainmaker may go after one of the major brokers at another house. More, a broker who’s jumped ship once for money might be tempted to do it again. Eventually, the wheel may get going so fast that no one can keep straight who’s working where.
Facing the possibility that the whole thing could spin out of control, the poaching brokerage houses mutually disarmed in 2004 by drawing up a protocol for broker recruiting. The legally binding agreement—which all employees were asked to sign—allowed brokers to take their clients’ names and contact information when changing jobs, but nothing else, none of the investment history. That made the switch much more difficult since office-jumping brokers would need to rebuild their client relationships almost from scratch.
Neither Bernadette Holland nor Amy Villani wanted to do the rebuilding when they jumped from the Smith Barney brokerage house in Bethlehem, Pennsylvania, to Janney Montgomery Scott LLC of Philadelphia in late 2008, so they took their client files with them. At least that’s what Smith Barney maintained when they filed a lawsuit against the two women. Their complaint alleged, “The brokers took with them customer files and information, despite their written assurances that they had complied with the protocol for broker recruiting, which expressly prohibits them from taking such files.” Bruce Kelly, “Smith Barney Seeks Restraining Orders against Four Ex-Reps,” investmentnews.com, accessed May 17, 2011. http://www.investmentnews.com/article/20090224/REG/902249971.
Time Abuse
Time abuse is the use of company time to seek another job. On the surface, it’s unethical. We need to be careful here, however, to distinguish exactly what “company time” means. Many jobs and work contracts are task related instead of time defined. That is, workers are hired to accomplish certain goals. In the construction business, a roofer may be signed up to get shingling done on a building before a certain deadline. In a case like that, there is no such thing as company time. The roofer’s free to work whenever and consequently to not work whenever. As long as the job gets done by the deadline, the obligation is fulfilled. So if he wants to sit up on the roof and field calls for new jobs, it’s hard to see ethical problems.
Problems do rise when workers are paid for their time. Most stockbrokers receive a base salary, a benefits package, or both as part of their work agreement. In exchange, they’re supposed to use the working day to pursue the brokerage’s interests, which means finding new clients and serving those already held. If Holland and Villani sat in the office talking with competing brokerage houses, they were breaking their obligation of fidelity—that is, their duty to honor their professional agreements. Of course they could respond that all workers take breaks. They eat a snack, sneak out for a cigarette, extend lunch. All those things are true. It’s also true, however, that the case can be made that those departures actually help employees do their job by providing the refreshment that comes with the occasional break from work. In the cases of Holland and Villani, it seems almost impossible for them to find a way to fold conversations with competing brokerages into the obligation to their current one.
Could those conversations be justified even while recognizing that they breach the duty to fidelity? Yes. The brokers could argue that another obligation simply outweighs their responsibility to maintain their working agreement with Smith Barney. Scratching the surface a bit on the Smith Barney situation provides an example. According to a story detailing the case in the Investment News,
Recruiters and executives from rival firms said the Smith Barney reps and advisers are continuing to leave the firm this year as it prepares to take the minority stake in a joint venture with Morgan Stanley, also of New York. Citigroup will exchange Smith Barney for a 49% stake in the new firm, dubbed Morgan Stanley Smith Barney, and a \$2.7 billion cash payment. Bruce Kelly, “Smith Barney Seeks Restraining Orders against Four Ex-Reps,” investmentnews.com, accessed May 17, 2011. http://www.investmentnews.com/article/20090224/REG/902249971.
Smith Barney, this means, was being taken over by Morgan Stanley, and Smith Barney brokers were fleeing in droves.
Of course every ship-jumping broker will have unique reasons for leaving, but it does seem plausible that at least some brokers believed this new management wouldn’t serve their interests well, and, by extension, their clients’ interests. On this foundation, Holland and Villani could build an argument. Once it became clear that the kind of service they’d been offering their clients would be impossible under the new management, they could conclude that their service responsibility to clients outweighed their responsibility to honor a commitment to Smith Barney. From there, the case may be made for the two to use company time to pursue the possibility of working for another brokerage.
Finally, it’s easier from an ethical perspective if the two could just isolate any discussions with potential future brokerage houses to nonbusiness hours, to lunch breaks, and after 5:00 p.m. If that’s not possible, however, then the decision to impose on the working day will have to find an ethical justification.
Equipment-use abuse is occupying an employer’s computers, telephones, and similar as part of the effort to find a job elsewhere. In the case of the two Smith Barney brokers, just as they may have used hours, so too they may have used Smith Barney’s equipment to negotiate their moving to another firm. This isn’t a strong form of theft (assuming Holland and Villani didn’t carry the machines out the door), but it’s a betrayal of the obligation they received when they accepted the equipment—the obligation to use it to serve Smith Barney’s interests. Or to at least to not subvert Smith Barney. Visiting Facebook once in a while, in other words, is OK, but sending e-mails to competitors, not so much.
Skill Theft
Skill theft is taking specific, job-related abilities acquired at one company to another. Stockbroking—like many posts—requires extensive, job-specific training, and it can’t be picked up along the way: legally, you can’t work in the field until you’ve completed the required courses and passed subsequent exams. Typically, the company pays for the learning. The larger houses organize their own stockbroking universities: new recruits are gathered and privately hired teachers lead them through the materials. What’s learned? Beyond the Wall Street knowledge about stocks and bonds, there are guidelines to master about providing recommendations and specific rules to follow that ensure clients understand the risks involved in creating a portfolio, especially on the more speculative side of the investment spectrum. Stockbroking is also a job in sales: brokers need to learn the delicate art of touting their own services without making promises about returns that can’t necessarily be kept. Finally, there’s quite a bit of technical knowledge that needs to be acquired so brokers can adeptly manage job-related and sometimes complicated software programs. All of this is expensive. When a company hires, they’re making a major commitment and incurring a real cost.
What obligations does the cost create? The answer divides onto a legal side and an ethical one. With respect to the law, many hiring organizations incurring significant training costs write clauses into job contracts protecting against the loss if a fresh employee comes aboard for the training and then tries to leave and work elsewhere. Called a repayment clause, it stipulates that departing workers may be billed for their training. In a typical clause, the cost must be repaid completely if the employee leaves immediately, and then a declining percentage is repaid if the departure occurs after three, six, nine months, and so on. (Here’s an Internet board where workers discuss the clause and ways of getting out of it: http://www.i-resign.com/uk/discussion/new_topic.asp?t=648. “Repayment of Course Fees,” I-resign.com, accessed May 17, 2011, http://www.i-resign.com/uk/discussion/new_topic.asp?t=648.)
Frequently, ethics and the law fail to overlap. In this case, however, an ethical solution to the problem of leaving an organization and taking your training with you may correspond with the strictly legal one. To the extent it’s possible to monetize the investment an employer makes in an employee, returning the money could satisfy several fundamental moral duties. The duty to not harm others is satisfied because the recouped funds may be applied by the organization to hire and train another employee. The duty of fidelity—keeping obligations—is satisfied insofar as the contract’s clauses are honored. Finally, the duty to reparation—to repay others when we harm them—is explicitly satisfied. The conclusion is that a stockbroker who takes a firm’s training and leaves may justifiably claim that the action was ethically acceptable because the contractual obligation was honored.
What if the contractual obligation isn’t honored? Is there any way for an employee to build an ethical case against repaying the company for training received? On the discussion board just mentioned, two routes are indicated. The first works from a utilitarian ethics, from the idea that the right action is the one bringing the greatest good to the greatest number. A contributor called there_are_many_questions writes,
I recently took a promotion at my current job and part of this was to study a level 4 course they had chosen. I had also applied to university, and due to the competitiveness of the course I wasn’t sure that I would get in. Hence the reason I agreed to go for the promotion. As it happens I have been accepted into university and I begin my course shortly. I knew that I would be required to pay back the cost of the course fees but it turns out, that they were more then I was originally told. To add, because I am becoming a full time student I am unlikely to have a permanent income. there_are_many_questions, April 4, 2009 (4:26 p.m.), “Repayment of Course Fees,” I-resign.com, accessed May 17, 2011, http://www.i-resign.com/uk/discussion/new_topic.asp?t=648.
So this person applied to a competitive university and wasn’t sure about getting in. Faced with the uncertainty, he or she took a promotion at the current company, which required company-provided training. In the end, as it turned out, there_are_many_questions got into the university and so left the company. Now the company wants the course fees back. As the writer notes, it’s probable that he or she won’t be able to pay them while enrolled as a student.
Looking at this situation, there’s no doubt here that the abandoned company has a strong ethical case. “Why is there_are_many_questions paying a university for classes when he or she already owes us for classes taken?” Good question. Here’s a utilitarian response: when everyone’s interests are fully taken into account, the decision to go to university and shaft the company does, in fact, serve the greater good. The abandoned company is damaged, no doubt, but really, unless it’s a small company on the brink of bankruptcy, it seems likely that they’ll absorb the loss and move on. Further, there_are_many_questions had just been promoted by the company, so, obviously, he or she had been doing good work for them; it’s not as though the entire professional relationship will be a pure loss. The jilted company, finally, will suffer the employee’s abandonment, but probably get over it without suffering lasting damage. There_are_many_questions, on the other hand, has a singular opportunity. The university is competitive—so much so that there was real uncertainty about gaining admission. To leave that opportunity behind simply to honor the clause of a contract seems like a choice causing real unhappiness, one that will continue over the long term. There’ll always be that feeling of “what if?,” as in “What if I’d just walked and gone to the university to learn to do what I really wanted?” In sum, when you weigh on one side the damage caused to the company by a departing employee who doesn’t refund training costs, and on the other side you weigh the damage done to there_are_many_questions if the university course is abandoned to repay the company’s training, it feels like there’s an imbalance. When viewed dispassionately from outside the situation, the greater good really is served by walking away from the debt and going to the university. No one is saying that walking away from debts is ethical, but it would be more unethical to let the university opportunity pass.
Another justification for walking away from the debt to the company could emerge along the lines of ethical egoism indicated by a contribution coming from Suze. She says the employee should hand over a bit of money and then “tell them to whistle for the rest, or else you will see them in court. I doubt they will pursue it.” Suze, January 6, 2005 (5:42 p.m.), comment to bradley, “Repayment of Course Fees,” I-resign.com, accessed May 17, 2011, http://www.i-resign.com/uk/discussion/new_topic.asp?t=648.
Solid ethical egoism. The right thing to do is the right thing for you, and that’s it. If you can get away with not paying, Suze says, then go for it. The reasoning is the company “probably won’t pursue it.” If they do, well then you might have to come up with the money. Until that happens, though, her advice is to protect your own interests, let the company take care of theirs, and see where things end up.
Client Adoption
Client adoption is moving to a new company and helping it appropriate part of the former company’s client base. Holland and Villani are perpetrators. In fact, this is the central idea behind their move: to transfer clients along with them.
With respect to the law, Holland and Villani are completely free to take their clients. It’s a black-and-white legal situation. All that’s in dispute is how much client information they can carry to their new office. And the ethics? The situation here seems fairly clear also, at least with respect to the brokers and the brokerage. There’s no doubt that both Holland and Villani on one side, and the Smith Barney brokerage house on the other, have a certain claim on the clients. While it’s true that the brokers did most of the work, the brokerage provided the infrastructure and opportunity. One way to adjudicate these competing claims when the broker and brokerage split is to check whether any prior agreements regulate the separation. In this case, an agreement does exist: the protocol for broker recruiting. The fact that the agreement is there indicates that all parties involved accept that brokers transferring and taking clients is part of the way things normally work: it’s fair. What needs to be settled, and what the protocol does presumably settle, are the rules for the process.
One difference, however, between ethics and the law in this situation is that ethical considerations open a broader scope onto the situation: the stakeholders increase. Where the law is concerned only with the brokerage house and the brokers, an ethical evaluation incorporates the clients as important since they’re tangibly affected by any decision. So what are the clients’ rights? How are they exposed by shifting brokers? Their first clear right is to say “no.” They’re under no obligation to follow when a broker changes firms, and there’s good reason to stay put. The paperwork involved in moving is significant. More, not all houses offer the same investments instruments, so there may actually be a cost involved as items in the portfolio are sold on one side so that a comparable product may be purchased from the new brokerage. This means the client really loses when they move along with a broker.
The clients are in a tough spot, though. Typically, they’ve invested a good bit of their own energy and time in fostering a broker-client trust and mutual understanding. There’s no guarantee—and this is especially true for longtime clients—that another broker would easily understand how the current portfolio fits together with the client’s life. If that’s right, then any client choosing to remain with the old firm will more or less have to start over by rebuilding their investments in consultation with whichever new stockbroker gets assigned to their case. More complications could be added, but the point is, the clients aren’t just bystanders. The brokers’ decision to change houses is going to affect them, and they may end up losing either way.
How do the clients’ interests—and the ethical responsibility to consider them—fit into the stockbrokers’ job switching? One way to begin reasoning toward an answer comes from Immanuel Kant’s categorical imperative, specifically the idea that we are to treat others as ends and never as means. Kant’s proposal is that we’re obligated, regardless of circumstances, to not treat others as tools or instruments; treating another as a “means” is just using them to get something else. So the question here for brokers when considering whether they hold an ethical license to do all they can to carry clients to a new firm becomes relatively simple. It would not be ethically recommendable if the change failed to serve the clients’ interests. If it doesn’t, if it turns out that the only people who come out ahead in all this are the brokers because they get a nice bonus from the new brokerage house for bringing over a busload of new investors, then what’s happening is the clients are reducing to mere means. They’re the tools the brokers use to get a payoff for themselves.
On the other hand, if the change does serve the clients’ interests, then Holland and Villani can say that they aren’t reducing the clients to nothing more than a payday, they’re actually treating the clients the way they themselves would want to be treated in that situation. In Kant’s language, the clients become “ends,” they’re no longer tools, and their interests can be considered a reason for Holland and Villani to make the switch. Now, we know from the case that Smith Barney was in the process of being engulfed by Morgan Stanley when Holland and Villani were making their move. If the brokers really believed that the services they could provide would be harmed by the change in corporate structure as Smith Barney became Morgan Stanley, and if they really believed their client services could be bettered by shifting over to the new brokerage house, then there’s space for claiming that bringing the clients along is morally right.
Market Adoption
Market adoption occurs when an employee moves from one company to another and helps the new employer appropriate part of the former company’s market. On the surface, this resembles client adoption. A firm’s market—the people to whom they deliver goods or services—is a collection of clients, a set of people who pay for the company’s efforts. Even so, there are important differences between a market and a client, and they result in radical changes to the ethical atmosphere.
The fundamental difference between a client and a market is that clients have names and markets have definitions. Clients are individuals with whom a company has cultivated a relationship; markets are aggregates of people at whom companies aim their products. When Holland and Villani changed brokerage houses, they tried to take clients with them because they were people they’d really talked to; they knew their phone numbers and life stories. A market, on the other hand, is composed of people you don’t know; it’s just anyone who shares a set of characteristics. For example, a brokerage house may want more business from middle-aged adults starting to think about retirement. So what do they do? They put up TV ads showing a fiftyish husband and wife at the dinner table talking about something they’d like to do together, say, visit China for a month. They can’t go now. They’re both working full time scraping money to pay for the kids’ college and making mortgage payments. When they retire, though, they’ll have the time; the kids will be done with school, the house will be paid for. What they need to do now is plan the financial landscape. They have a question: what kind of investments guarantees their trip? The commercial ends with a tagline: “Smith Barney: For the Journey of Your Life.” That’s a bad commercial, but it shows what a market is. Smith Barney doesn’t care who shows up at their branch offices the next day. They don’t care if it’s Sam Smith or Jane Jones; they just want fifty-year-olds with some money to invest.
Many companies are constantly trying to convert markets into clients, trying to replace purely economic relationships with personal ones because people tend to stick with their brands. Markets, by contrast, shift easily; whichever company has the best TV commercial or the lowest prices, that’s the one that gets the largest chunk.
Our economy is built on the idea of competition for markets: the premise that they’re open and may be pursued by any organization is the basis for business activity. Obviously, there are islands of exception, things like trash collection performed by the city government. But for the most part, it’s nearly impossible to form an ethical argument against employees leaving one company and going to another and then chasing the same market. To be against it isn’t to be against one action or another on the part of an employee; it’s to be against the entire economic structure in which we live. (It’s possible to be against that structure, but that’s a different debate.)
Idea Appropriation
Idea appropriation occurs when an idea belonging to the old company is given over to the new one. If a chemist at Coca-Cola accepts a job at Pepsi and promptly reveals Coke’s secret formula, that’s idea theft. In the brokerage business at the level Holland and Villani worked, there probably weren’t too many secrets to steal. Clients yes, but no shadowy formulas for stock picking or anything like that.
Higher up in Smith Barney, however, it’s perfectly possible that analysts responsible for selecting stock winners (and weeding out losers) had developed an algorithm, a kind of recipe of numbers to produce answers. In the finance industry, those who rely on numbers—share price, a company’s annual earnings, and so on—to make stock predictions are called quants, which is short for quantitative data analyst. They take these numbers, stick them into a secret mathematical formula, and out pops another number presumably showing whether the stock is a good buy or not. These formulas are a brokerage’s concealed idea and, presumably at least, a key to their success: clients are going to flock to those brokerages consistently providing good stock-buying tips. Now if you happen to be a quant at Smith Barney, and you’re offered a similar position at a competing firm, can you take the formula with you?
This is a knotted question, both legally and ethically. Starting with the law, a company’s ideas are broadly divided into two categories: trade secrets and patented or copyrighted information. Trade secrets consist of nonpublic information that
• concerns a company’s own activities and that if known by competitors would negatively affect the company’s ability to compete against them;
• is owned by the company (though it may not be copyrighted or patented) because it was developed by the company or purchased from another company;
• is meant to remain secret as is made clear by explicit directives, security measures, or contractual agreements with employees.Manuel Velasquez, Business Ethics: Concepts and Cases 6th Edition (Upper Saddle River, NJ: Pearson, 2006), 357. List adapted for this text.
Trade secrets (which are sometimes called proprietary data) are ideas a company develops and uses, and that they don’t want anyone to know about. In the case of the quants at Smith Barney, a formula for picking stock winners kept under lock and key would be a trade secret.
The other broad category of ideas belonging to companies is patented or copyrighted information. This is more or less a trade secret but without the secret. It’s an idea a company develops that helps it compete, but the strategy for protecting the idea from competitors is different. Instead of pretending like the idea doesn’t exist, or doing everything possible to make sure the details don’t leak, what the company does is make the idea public by registering it with the government, claiming thereafter the sole right to use the idea. After registration, the idea’s no longer a secret, but that doesn’t matter since anyone else who tries to use it is vulnerable to being sued.
So the recipe for Coke is a trade secret but not patented. If you can figure out what it is, you’re free to use it. The word Coke, on the other hand, is copyrighted. Everyone knows what it is, but you’re not allowed to use it, or at least not use it to label your own soft drink. The result of all this for an employee switching companies is that the legal questions involving stolen ideas tend to involve trade secrets. You can’t steal an idea that’s copyrighted because everyone knows that idea already. But a trade secret—the recipe for Coke, the formula an investment house like Smith Barney uses to pick stocks—that definitely can be stolen; it can be revealed to the new company.
The Economic Espionage Act of 1996 makes the theft of trade secrets a federal crime. The law is clear on the issue. The problem is it’s hard to prove that a trade secret is stolen. If you steal the recipe for Coke, you might disguise the theft by adding a tad more sugar to the version you make. Or, if you steal one of Smith Barney’s quantitative stock-picking formulas, maybe you adjust the numbers slightly: not so much that it effects the predictions, but enough to make the formula different. In these cases it’s going to be hard to absolutely prove the formula is stolen. In broad strokes, finally, the law of intellectual property is clear. When you get down into specific cases, however, things rapidly get twisted.
What are the ethics? If you’re a quant at Smith Barney and you get a call from your broker friends—Holland and Villani—saying that they’re taking their clients to a new firm and they’d like you to come along, bringing Smith Barney’s secret formula for stock picking as well, what kind of ethical responses are possible?
The “no” response is easily justified on moral grounds. The trade secret is company property, really no different from a computer or a desk, and taking it—even if you’re taking it by memorizing it and carrying it out in your mind—is theft just like stealing objects. Further support for the no answer comes from the responsibility to fidelity, the responsibility to maintain agreements. Almost all companies that work with trade secrets write a clause into employment contracts stipulating confidentiality on sensitive matters. So the ethical obligations not to steal, and to keep our word, make a good case for declining the request to steal an idea.
Going the other way, some situations allow a reasonable argument to be mounted in favor of leaving with the trade secret or proprietary data. One justification is authorship. Someone who provides a company with an invention can fairly expect to be rewarded by the company. Inventing an idea is labor like any other, and in any field people who do exemplary work can expect promotions and rewards from the larger organization. If, unfortunately, an inventor feels as though the company isn’t providing a reward—a promotion, a healthy bonus, or similar—then he or she may feel justified in leaving with his or her work, just as a good accountant may feel the need to look for employment elsewhere after being repeatedly passed over for promotion. The basic argument here is one of fairness. If a quant at Smith Barney invents an algorithm for stock picking that produces excellent results and then sits by and watches others who’ve contributed less receive larger year-end bonuses, the conclusion may be reached that for balance to be restored, it’s necessary to take the algorithm to another firm where a reward will be guaranteed.
Another ethical argument could be located in the difficulty that may exist in separating the skills an employee gains on the job from an idea or a certain kind of knowledge developed on the job. A quant who figures out a good algorithm may be able to claim that, as a skilled manipulator of numbers as they relate to economic markets, his ability as an analyst allows him to take the strategy with him. Stated differently, because of the unique skills possessed, when the quant is hired for a new brokerage, he would be able to just reinvent the algorithm. That’s possible because of the rare analytic talents the quant possesses, not because the old algorithm is being stolen. In general, it can be very difficult to separate skills as they relate to ideas from the ideas themselves. And in this case, it may be that the quant’s skills provide a license to regenerate the stock-picking algorithm for whatever firm is paying the salary.
Finally, an ethical case for the revelation of a trade secret may be made on humanitarian grounds. It’s difficult to envision a good example of this is in the world of stock picking, but in the no-less-lucrative field of medical research, a humanitarian context for taking an idea easily comes into focus. If a cure for cancer were invented by a private company, the stock value would blow through the roof, but only if they kept the drug formula secret and sold the serum at a fairly high price. In this case, a worker in the company may feel justified in taking a job with an international health nonprofit, and then revealing the serum’s formula and the technique for its production so that it could be made and distributed at a low cost to all those in need throughout the world. A theft would be committed and a wrong done, but an obligation to the greater good, to the health benefits the theft would allow, may justify a departing worker’s carrying a company’s secret out the door.
Key Takeaways
• Using time and equipment paid for by a current employer to look for a new job is ethically problematic.
• Job skills provided by employers may create employee obligations.
• Employees transferring from one company to another—and asking established clients to follow—face a broad range of ethical concerns.
• Ideas belonging to an organization may not be taken to another without raising ethical concerns.
Exercise \(1\)
1. Ethically, is there a difference between a worker sitting at her desk during office hours and working on her Facebook page and one who’s trolling Monster, looking to find a new job somewhere else? If not, why not? If so, what’s the difference?
2. If a company pays for your job training, is there a way to calculate how long you need to work there to satisfy the obligation to use the training for the company’s benefit?
3. In business terms, what’s the difference between trying to steal clients from your old employer and trying to steal market share? In ethical terms, what’s the difference?
4. What’s the difference between a trade secret and a patented idea? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/06%3A_Employee's_Ethics-_Getting_a_Job_Getting_a_Promotion_Leaving/6.04%3A_Looking_for_a_Better_Job_Outside_the_Company.txt |
Learning Objectives
1. Define and consider ethical issues surrounding the decision to quit.
The Ethics of Quitting
There’s a difference between giving a few weeks’ notice that you’ve decided to leave your job in cold Minneapolis to try your luck in Florida, and suddenly walking out three days before the year’s most important presentation, the one your team was responsible for creating. The first scenario won’t cause many objections, but the second raises this question: what do departing workers owe employers?
If the answer is sought through a prism of fairness—through the idea that justice in the workplace requires equal treatment all around—the answer might be “not very much.” Since most work contracts offer employment only at will, employers are typically positioned to let workers go at any time for any reason that’s convenient. And they do.
When Ameritech was letting people go they would call them into a conference room and say their services were no longer needed. They would then show them to the door. Any coats or personal effects left at their desk would be shipped to them. James Carlini, “Ready to Leave? Why You Shouldn’t Give Two Weeks’ Notice,” WTN News, April 27, 2005, accessed May 17, 2011, wistechnology.com/articles/1757.
Especially in larger organizations where layoffs can come massively, the employee’s pleading, “You shouldn’t fire me because we just bought a house and had our first child,” isn’t going to persuade too many CEOs. If it doesn’t, it’s going to be difficult to justify the demand that employees, no matter how vital they may be to the company, come in to work when they plainly don’t want to.
It’s also true, however, that many employers extend benefits going beyond contractual obligations, and yes, some bend over backward to keep their workers on, even when it doesn’t make strict business sense. When Malden Mills burned to the ground, owner Aaron Feuerstein spent millions keeping all three thousand employees on the payroll with full benefits for months. Some asked whether he was a fool. “Malden Mills: A Study in Leadership,” Organizational Productivity Institute, Inc., Quality Monitor Newsletter, October 1996, accessed May 17, 2011, http://www.opi-inc.com/malden.htm. Maybe he was, but he proves that every situation is different: some employers are cutthroats, others doggedly loyal when it comes to the people doing the work.
This is the important point for anyone thinking about leaving their organization in a lurch. If the ethical justification for splitting is built on the idea of fairness—which in this case reduces to the principle that the employee owes the organization the same loyalty that the organization displays for the employee—then it’s the worker’s responsibility to ask how the organization responds to employees’ needs.
It should be underlined that this ethical attitude isn’t quite a form of turnabout is fair play: the argument isn’t so much that if a company has screwed (or not) people in the past, then they should get screwed (or not) now. The argument from fairness is simply that the weight of self-interest when set against the interests on the other side should be more or less balanced.
A different framework for considering the question of walking out on a job virtually without warning comes from the utilitarian perspective, from the idea that in any situation the morally right act is the one increasing happiness for all those involved. Looking at the question this way, workers considering leaving need to weigh their benefit from walking out against the suffering incurred by everyone else.
The “everyone else” includes the worker’s fellow employees. If a presentation really does need to be done and given in three days and you disappear, there’s just not going to be time to hire someone else and get them up to speed; those who are already there and on the project are going to have to do your share. It’s worth noting here that the concern about whether the company has previously demonstrated loyalty to its workers doesn’t arise within this perspective. What matters is a calculation of what serves everyone’s best interest now and going forward. So even if you feel no loyalty to the company—and even if the company demonstrates no loyalty to its employees—you may still decide to stay on until a more convenient separation time can be found just so that you don’t wrong those who work with you.
%\$&^*#!
Everyone who’s ever worked anywhere has felt the temptation at one point or another to not just quit but to go out in flames: march into the boss’s office, let loose an avalanche of %\$&^*#!, and storm out. It would feel good. But should it leave you feeling guilty afterward? Within a utilitarian scheme, the answer is “maybe not.” If ethical justification is based on the idea that the right path is the one bringing the greatest good to the greatest number, then it might just be that the release and clean break the outburst allows is worth the scene and the discomfort (or maybe the private joy) others feel about the whole thing. Of course, by the same reasoning, anyone standing outside that door and taking one last breath before storming through better consider their own long-term happiness. Probably, bawling out the boss isn’t going to help your future job-seeking prospects.
Key Takeaways
• Most ethical issues surrounding the quitting of a job gather around those cases where the leaving is abrupt.
• The ethics of leaving a job involves a range of people and their interests.
Exercise \(1\)
1. If you feel as though you’ve been mistreated at work, can an ethical justification be formed for walking away at a moment of maximum pain for the company? Explain.
2. Can you think of a kind of job or line of work where any employee could walk off at any time without ethical qualms? What characteristics of the job allow that freedom? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/06%3A_Employee's_Ethics-_Getting_a_Job_Getting_a_Promotion_Leaving/6.05%3A_Take_This_Job_and....txt |
Cooking a Résumé
Source: Photo courtesy of cloudsoup, http://www.flickr.com/photos/cloudsoup/2762796137/.
Chef Robert Irvine’s résumé was impressive. According to the St. Petersburg Times, he advertised his experience as including:
• A bachelor’s of science degree in food and nutrition from the University of Leeds.
• Royal experience working on the wedding cake for Prince Charles and Princess Diana.
• He was a knight, as in Sir Robert Irvine, Knight Commander of the Royal Victorian Order, handpicked by the Queen.
• For several consecutive years, he’d received the Five Star Diamond Award from the American Academy of Hospitality Sciences.
• He’d served as a White House chef.
The truth—when the newspaper revealed it on a splashy front-page article—wasn’t quite so overpowering:
• The claimed BS degree? According to a press officer at the University of Leeds, “We cannot find any connection in our records between Robert and the university.”
• The royal wedding cake? Well, he did help pick some of the fruit that went into it.
• The knighthood? No.
• The Five Star Diamond Award? True, but it’s not the AAA’s prestigious Five Diamond Award or Mobil’s five stars. The American Academy of Hospitality Sciences is actually a guy’s apartment in New York, and the award is granted to anyone who pays a fee.
• White House chef? Kind of. But he didn’t prepare sophisticated dishes for the president or anything like that; he cooked food for the cafeteria line, serving military workers at the White House. Ben Montgomery, “TV Chef Spiced Up His Past Exploits,” St. Petersburg Times, February 17, 2008, accessed May 17, 2011, www.sptimes.com/2008/02/17/Southpinellas/TV_chef_spiced_up_his.shtml.
After the truth came out, Chef Irvine was fired from his popular TV show on the Food Network, Dinner: Impossible. A few months later, however, after the scandal blew over and he’d corrected his résumé, he reapplied for his old job, was rehired, and he’s on TV today.
Exercise \(1\)
1. When Irvine first applied for the job as TV show chef, he had to consider whether he should “embellish” his résumé, and if so, how far he should go. What ethical responsibilities should he have considered? To whom?
2. The five types of positive résumé misrepresentations are
• false credentials,
• false experience,
• false chronology,
• embellished experience,
• false references.
Negative résumé misrepresentations have also been discussed. Looking back at Irvine’s résumé adventure, can you label each of his transgressions?
3. Are some of the lies worse than others in the sense that they relate directly to his ability to be a successful TV chef? Are others less objectionable because they don’t relate to the job he was applying for? Why or why not?
4. It’s better to seek forgiveness than ask permission. In a sense, that’s what Irvine did. He lied on his résumé, got the job, did well, got caught having lied on the résumé, got fired, sought forgiveness, got it, and got back a TV show job he might never have received had he not lied in the first place. Ethically, how could you go about justifying his course of action?
5. The Internet site Fakeresume.com includes the following advice for job seekers: “Hiring Managers Think You’re Lying Anyway!! Yep that’s right, the majority of human resources managers assume that EVERYONE embellishes, exaggerates, puffs up and basically lies to some extent on your résumé. So if you’re being totally honest you’re being penalized because they’re going to assume that you embellished your résumé to a certain extent!” Fakeresume.com, accessed May 17, 2011, http://fakeresume.com.
Assume you believe this is true, can you make the ethical case for being honest on your résumé regardless of what hiring managers think?
6. Assume Fakeresume.com is right. Everyone “embellishes, exaggerates, puffs up and basically lies to some extent on their résumé.” On the basis of the obligations you hold to others (hiring managers, coworkers, other applicants) and to yourself, could you form the argument that you have an ethical responsibility to lie?
7. You have a friend you like and respect. You’ve spent a lot of time with him over the years in school and you know he’s very responsible, a hard worker, and smart. He’d be good at almost any entry-level type job; you’re sure of it. He comes to you and asks you to fake having been his boss for a pizza delivery business. “I just want,” he says, “someone out there who I can count on to say I’m the good, responsible type. You know, someone who’s always on time for work, that kind of thing.” Would you do it? Justify your answer.
Inmate Wages
Source: Photo courtesy of Tomáš Obšívač, http://www.flickr.com/photos/toob/38893762/.
An Internet posting carries a simple Q&A thread: someone’s searching for a good upholstery shop in Maryland. An unexpected answer comes back from Fenny L: criminals. A local jail has a job-training program for their inmates and they contract the men at \$1.50 per hour. Fenny L., April 7, 2009, “Searching for good upholstery shop in MD,” accessed May 17, 2011, http://www.yelp.com/topic/gaithersburg-searching-for-good-upholstery- shop-in-md.
The responses to the suggestion are intense and all over the place, but many circle around the ethics of the numbingly low wage, leading Fenny L to introduce a new thread. Here are the three main points she makes.
• While I object to slave labor…at the same time, I don’t see this as slave labor. If I wished to become a professional uhhh…upholsterer (what do they call themselves?!?) I would need to spend money on the classes and etc. The Dept of Corrections doesn’t charge the inmates for these classes—thusly, I don’t see a problem with only paying the inmates \$1.50 for their work.
• Also, we use free/cheap labor ALL the time…in the form of Interns. Interns are often paid nothing, or extremely little—because they want the job experience…that is their compensation. In turn, I feel that the inmates are getting job experience so that they can earn an honest living once they get out.
• Finally, I think that the Dept. of Corrections has to make the wages obscenely low—because let’s be honest…how many people would feel comfortable with having a convict in their home to do work? The only way they can be competitive and offer the inmates this opportunity, is to make it worth the consumer to utilize them—by having obscenely low wages. Fenny L., April 17, 2009, “Ethics of Inmate Wages,” accessed May 17, 2011, http://www.yelp.com/topic/washington-ethics-of-inmate-wages.
Exercise \(2\)
1. Suppose you made a mistake and ended up in jail for a few months. While there, you participated in this program. Now you’re out and seeking an upholstering job.
• You’re considering leaving the jail part of this episode off your résumé. Whose interests should you consider before going ahead? What ethical case could you make for leaving it off your résumé?
• Given the kind of work you’d be doing—going into peoples’ homes and upholstering—does the nature of your “mistake” (drunk driving versus shoplifting, for example) influence the ethical consideration of whether you ought to acknowledge this part of your life on your résumé? How?
• Maybe for the first several years you should leave your prison training on your résumé, but is there a kind of statute of limitations, a certain amount of time that, once passed, gives you an ethical license to leave something negative off your résumé? How would you calculate the amount of time, and based on what factors?
2. Sometimes a split opens between a community-wage level (what people in general in a certain place are paid for certain labor) and an organizational-wage level (what people at a specific organization are paid for the same labor). The split clearly opens here; the prisoners are paid much less than other upholsterers in the larger community.
• Fenny L believes this split is justified by the ethics of a market economy. She makes the point that most people really don’t want crooks wandering around their house, so in order to get business, the prison needs to make its offer attractive by cutting labor prices. She’s probably right in terms of economics, but in terms of ethics, do you find this reasoning convincing? Why or why not?
• Can you form an ethical argument in favor of the prisoners demanding a pay raise to make their salary comparable with other upholsterers?
3. If you were an upholsterer and your company had a practice of hiring ex-convicts because they’d work for lower wages, could you make the ethical argument that you deserve a higher wage than those other workers with similar experience and skills because you’d never had trouble with the law? What would your argument look like?
4. If you were an upholsterer looking to wiggle a pay hike, would you ask a friend to pose as the boss from a competing outfit and offer you the same job at a higher salary? In considering the question, what are the specific ethical obligations tugging one way or the other, and to whom do you have the obligations?
5. Fenny L. believes the workers are receiving a fair wage because they’re getting valuable training and experience that will improve their future job prospects. That’s probably true, but the fact remains that the workers are being paid much less money, for the same work, than others.
• Is an internship—or any post where you receive less than the community-wage level for a certain kind of work—a humiliation? Why or why not?
• Is there an ethical objection to allowing yourself to be humiliated? Explain.
6. Many jobs require company-sponsored training, and frequently employees enrolling in corporate training programs sign repayment clauses, promising to repay the training’s cost if they leave before a certain amount of time has passed, say, one year. Is there an ethical argument here for the idea that repayment clauses are a form of prison and therefore unethical? Why or why not?
7. Upholstering is not a job where experience counts very much. Yes you need some initial training and practice, but once you’ve got that, ten years more experience isn’t going to make you a significantly better upholsterer of common items. Accepting that reality, if you were the upholsterer who’d been with the company the longest, could you still translate your seniority into an ethical argument that you deserve a higher wage than others who’ve been around less time? Explain.
Dirty Tricks
Source: Photo courtesy of Henk de Vries, http://www.flickr.com/photos/henkdevries/2662269430/.
In his book 21 Dirty Tricks at Work, author Colin Gautrey gives his readers a taste of how intense life at the office can get. Here are two of his favorite tricks. “21 Dirty Tricks,” The Gautrey Group, accessed May 17, 2011, www.siccg.com/fre/DirtyTricks.php.
Exercise \(3\)
1. The exposure trick. Coercing a coworker by threatening to make public a professional or personal problem
If you’re angling for a raise, and you know something damaging about your supervisor, you may be tempted by the tactic of exposure. Imagine you know that your supervisor has a prescription drug habit and it’s getting worse. Her performance at the office has been imbalanced but not so erratic as to raise suspicions. You plan to confront her and say you’ll spill the beans unless she gets you a raise. Whose interests are involved here? What responsibilities do you have to each of them? What ethical justification could you draw up to justify your threat?
2. The bystander trick. Knowing that someone is in trouble but standing on the sidelines and doing nothing even when intervention is clearly appropriate and would be helpful to the business
At an upholstering company you’re in competition for a promotion with a guy who learned the craft in jail, through the Department of Corrections’ job-training course. He hadn’t revealed that fact to anyone, but now the truth has come to light. You’ve worked with him on a lot of assignments and seen that he’s had a chance to make off with some decent jewelry but hasn’t taken anything. You could speak up to defend him, but you’re tempted to use the bystander trick to increase the odds that you’ll win the duel. What ethical argument could you draw up to convince yourself that you shouldn’t stand there and watch, but instead you should help your adversary out of the jam?
The End of Destiny's Child
Source: Photo courtesy of Alex Johnson, http://www.flickr.com/photos/89934978@N00/2997961865/.
The R&B group Destiny’s Child was composed of Beyoncé Knowles, Kelly Rowland, and Michelle Williams. They started slow in 1990 (Beyoncé was nine), giving miniconcerts in crumbling dance halls around Houston, and then kept at it through small-time talent shows, promised record deals that never materialized, and the disintegration of Rowland’s family (Beyoncé’s parents took her into their home). They finally got a crummy but real record deal in 1998 and made the most of it.
By 2002 they’d become a successful singing and dance act. But soon after, they broke up under the pressure of Beyoncé’s solo career, which seemed to be speeding even faster than the group effort.
In 2004 they reunited for a new album, Destiny Fulfilled, which went triple platinum. On the European leg of the subsequent world tour, Beyoncé quit more definitively. She took the fan base with her and began evolving into the hugely successful Beyoncé we know now: pop music juggernaut, movie celebrity, clothing design star.…The other two members of the original group? Today they appear on B-list talk shows (when they can get booked) and are presented to viewers as Kelly Rowland, formerly of Destiny’s Child, and Michelle Williams, formerly of Destiny’s Child.
According to the New York Times it shouldn’t be surprising that things ended up this way: “It’s been a long-held belief in the music industry that Destiny’s Child was little more than a launching pad for Beyoncé Knowles’s inevitable solo career.” Lola Ogunnaike, “Beyoncé’s Second Date with Destiny’s Child,” New York Times, November 14, 2004, accessed May 17, 2011, http://www.nytimes.com/2004/11/14/arts/music/14ogun.html?_r=1.
Which leads to this question: Why did she go back in 2004 and do the Destiny Fulfilled album with her old partners? Here’s what the New York Times reported: “Margeaux Watson, arts and entertainment editor at Suede, a fashion magazine, suggests that the star does not want to appear disloyal to her former partners, and called Beyoncé’s decision to return to the group a charitable one.” But “from Day 1, it’s always been about Beyoncé,” Ms. Watson said. “She’s the one you can’t take your eyes off of; no one really cares about the other girls. I think Beyoncé will eventually realize that these girls are throwing dust on her shine.” Lola Ogunnaike, “Beyoncé’s Second Date with Destiny’s Child,” New York Times, November 14, 2004, accessed May 17, 2011, http://www.nytimes.com/2004/11/14/arts/music/14ogun.html?_r=1.
Exercise \(4\)
1. Destiny’s Child rolled money in, and it needed to be divided up. Assume the three singers always split money equally, going way back to 1990 when it wasn’t the profits they were dividing but the costs of gasoline and hotel rooms, which added up to more than they got paid for performing. About the money that finally started coming in faster than it was going out, here are two common theories for justifying the payment of salaries within an organization: Money is apportioned according to the worker’s value to the organization, and money is apportioned according to the experience and seniority relative to others in the organization.
• How would these two distinct ways of divvying up the revenue change the salary assigned to the three singers?
• When success came, how could Beyoncé ethically justify demanding a greater share of the pie?
• How could you justify experience and seniority as the ethically preferable route to follow when paying the three singers making up Destiny’s Child?
2. There are a lot of rhythm and blues groups out there, singing as hard as they can most nights on grimy stages for almost no audience, which means the organizational-wage level of Destiny’s Child was way, way above the wage level of other organizations in the same line of work.
• When the members of Destiny’s Child cash their paychecks, should they feel guilty about getting so much more than others in their profession who work just as hard as they do, but in different organizations where the pay is less? Why or why not?
• Cashiers at Whole Foods Market get paid more than cashiers at Walmart. Should the Whole Foods cashiers feel guilty? Why or why not?
3. Beyoncé didn’t break clean from Destiny’s Child. She rejoined the organization because, according to Watson, “she didn’t want to appear disloyal to her former partners.” Beyoncé felt an ethical responsibility to mind the interests of Kelly Rowland and Michelle Williams. As she thought about leaving the group more definitively, what other people (if any) do you suppose she should have considered in order to feel ethically justified in finally and permanently taking off on her own? What are the obligations she holds to Rowland, Williams, and any others you have added to the list?
4. Destiny’s Child was a pop group; their hits included “Say My Name,” which isn’t too different from Beyoncé’s smash “Single Ladies (Put a Ring on It).” The videos are pretty close, too: nearly identical mixes of rhythm, dancing, fun, and sexy provocation. After comparing the video of “Say My Name” “Destiny’s Child—Say My Name,” YouTube video, 4:00, posted by “DestinysChildVEVO,” October 25, 2009, http://www.youtube.com/watch?v=sQgd6MccwZc. with “Single Ladies,” “Beyoncé—Single Ladies (Put A Ring On It),” YouTube video, 3:19, posted by “beyonceVEVO,” October 2, 2009, http://www.youtube.com/watch?v=4m1EFMoRFvY. it’s hard to deny that Beyoncé benefited from her time in Destiny’s Child. Very possibly, she feels as though she owes Rowland and Williams part of her success, and that’s why she did the reunion record and tour. Now, if you were Rowland or Williams, could you form an ethical argument that Beyoncé owes you more than that based on the following:
• Client appropriation. When Beyoncé left, she benefited from a group of devoted listeners constructed by Destiny’s Child. Do you suppose these would be clients, a market, or some mix? How do you imagine Beyoncé benefited from them and what should she do to repay the obligation?
• Skill theft. When Beyoncé left, Destiny’s Child still had gas in its engine: the group was selling CDs and touring successfully. It could do that because of the skills the three members learned years earlier through tireless rehearsals and small-time concerts. During all those years they were training for musical success, but when they got it, Beyoncé quickly left the organization. She went out on her own and kept doing what she’d learned to do with Rowland and Williams. Given that, use an ethical theory to make the case that Beyoncé is significantly obligated to the other two. What is her obligation? Is there some point—either after a certain amount of time has passed or an amount of money has been paid or something else—where the obligation will have been satisfied? Explain.
Stolen Intel
Source: Photo courtesy of ctitze, www.flickr.com/photos/ctitze/329928527/.
Biswamohan Pani, a low-level engineer at Intel, apparently stole trade secrets worth a billion dollars from the company.
His plot was simple. According to a Businessweek article, he scheduled his resignation from Intel for June 11, 2008. He’d accumulated vacation time, however, so he wasn’t actually in the office during June, even though he officially remained an employee. That employee status allowed him access to Intel’s computer network and sensitive information about next-generation microprocessor prototypes. He downloaded the files, and he did it from his new desk at Advanced Micro Devices (AMD), which is Intel’s chief rival. Pani had simply arranged to begin his new AMD job while officially on vacation from Intel.
Why did he do it? The article speculates that “Pani obtained Intel’s trade secrets to benefit himself in his work at AMD without AMD’s knowledge that he was doing so, which is a fairly frequent impulse among employees changing jobs: to take a bit of work product from their old job with them.” Michael Orey, “Lessons from Intel’s Trade-Secret Case,” Bloomberg Businessweek, November 18, 2008, accessed May 17, 2011, http://www.businessweek.com/print/technology/content/nov2008/tc20081118_067329.htm.
According to Nick Akerman, a New York lawyer who specializes in trade secret cases, “It’s amazing how poorly most companies [protect their trade secrets]. ”Michael Orey, “Lessons from Intel’s Trade-Secret Case,” Bloomberg Businessweek, November 18, 2008, accessed May 17, 2011, http://www.businessweek.com/print/technology/content/nov2008/tc20081118_067329.htm.
After being caught, Pani faced charges in federal court for trade secret theft, with a possible prison term of ten years. He pleaded innocent, maintaining that he downloaded the material for his wife to use. She was an Intel employee at the time and had no plans to leave.
Exercise \(5\)
1. Can the fact that Pani got the information so easily be used to build an ethical case that what he did wasn’t wrong? If not, why not? If so, what does the case look like?
2. Ethically, does it matter whether Pani was a key author of the taken documents? Why or why not?
3. According to the article, a lot of people do what Pani did. Is that a justification for his action? Explain.
4. Did Pani have a responsibility to formally end his employment status with Intel before joining AMD, or is it OK for him to be vacationing from Intel while working at AMD? Whose interests need to be considered to answer this question thoroughly?
5. As James Carlini, a professor at Northwestern University, points out in an essay, James Carlini, “Ready to Leave? Why You Shouldn’t Give Two Weeks’ Notice,” WTN News, April 27, 2005, accessed May 17, 2011, wistechnology.com/articles/1757. it is accepted wisdom in the world of business ethics that employees leaving a company ought to provide two-weeks’ notice to employers. Use the Pani case to make the argument that employees should notify employers that they’re leaving only at the last moment.
6. Pani left Intel after receiving a poor job review. Probably he was mad about that. From a utilitarian perspective—one that defines the ethical good as the greatest good for the greatest number over the long haul—would Pani have acted more ethically had he stormed into his boss’s office and screamed at the guy and quit instead of biting his tongue, getting a job elsewhere, and doing what he did? Explain. | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/06%3A_Employee's_Ethics-_Getting_a_Job_Getting_a_Promotion_Leaving/6.06%3A_Case_Studies.txt |
Chapter 7 examines some ethical decisions facing employees. It considers the values guiding choices made over the course of a workday.
07: Employee's Ethics- Making the Best of the Job You Have as You Get from 9 to 5
Learning Objectives
1. Define a conflict of interest.
2. Show how gifts in the business world may create conflicts of interest.
3. Delineate standard practices for dealing with gifts.
4. Consider how receiving gifts connected with work may be managed ethically.
5. Define bribes and kickbacks in relation to gifts.
6. Show how the ethics of bribes and kickbacks can be managed inside the ethics of gifts.
Living the High Life
If you’re young, looking for work, and headed toward a big city (especially New York), then you could do a lot worse than landing a job as a media buyer for an advertising agency. According to an article in New York magazine, it’s working out well for twenty-four-year-old Chris Foreman, and it’s working out despite a salary so measly that he can’t afford his own place, a ticket to a movie, or even to add meat to his homemade spaghetti. Sarah Bernard, “Let Them Eat Crab Cakes,” New York, accessed May 19, 2011, http://nymag.com/nymetro/news/media/features/2472.
This is what makes the job click for Foreman: as a media buyer, he oversees where big companies like AT&T place their advertisements. And because those ads mean serious money—a full page in a glossy, top-flight magazine costs about five times what Foreman earns in a year—the magazines line up to throw the good life at him. Thanks to the generosity of Forbes magazine, for example, Foreman spends the occasional evening on the company’s vast Highlander yacht; he drinks alcohol almost as old as he is, munches exquisite hors d’oeuvres, and issues orders to white-suited waiters. While guests arrive and depart by helicopter, Foreman hobnobs with people the rest of us see only on movie screens. A scan of the Highlander guest book turns up not just celebrities but serious power too: Margaret Thatcher was a guest once.
A night on the Highlander is a good one, but it’s far from the only event lighting up Foreman’s glitzy life. A few of his other recent outings are listed in the article, with some estimated cash values attached: An all-expenses-paid ski weekend (worth almost \$1,000, in Foreman’s estimation); tickets to see Serena Williams at the US Open (\$75 each); invites to the Sports Illustrated Swimsuit Issue party, where he chatted with Heidi Klum and Rebecca Romijn-Stamos; prime seats for sold-out Bruce Springsteen concerts (\$500 each); dinners at Cité, Sparks, Il Mulino, Maloney & Porcelli, and Monkey Bar, to name a few of his favorites (\$100 a pop).
Foreman observes the irony of his life: “It’s kind of crazy, I had dinner at Nobu on Monday [the kind of restaurant few can afford, even if they’re able to get a reservation], but I don’t have enough money to buy socks.” Sarah Bernard, “Let Them Eat Crab Cakes,” New York, accessed May 19, 2011, http://nymag.com/nymetro/news/media/features/2472.
The Highlander’s spectacularly wealthy owner is Steve Forbes. If he invites former British prime minister Margaret Thatcher aboard for a holiday weekend, you can understand why: she’s not just an interesting person; she’s living history. Serena Williams would be an interesting guest, too, in her way. The same goes for Heidi Klum and Ms. Romijn-Stamos, in a different way. What they all have in common, though, is that you know exactly what they’ve got, and why a guy with a big bank account would treat them to an evening. But what, exactly, does Mr. Forbes expect to get in return for inviting media buyer Chris Foreman? The answer: “We media buyers are the gatekeepers—no one at AT&T actually purchases the ads. If at the end of a buying cycle, your budget has an extra \$200,000, you’ll throw it back to the person who treated you best.” Sarah Bernard, “Let Them Eat Crab Cakes,” New York, accessed May 19, 2011, http://nymag.com/nymetro/news/media/features/2472.
The answer, in a word, is money.
What’s Wrong with Gifts and Entertainment?
The fundamental problem with the gifts Foreman received and the free entertainment he enjoyed is that they create a conflict of interest, a conflict between professional obligations and personal welfare. As a paid media buyer, it’s Foreman’s job and obligation to buy ads in the magazines that will do his clients the most good, that’ll deliver the biggest bang for the buck. But against that, as a single twenty-four-year-old guy in New York City, it’s in his personal interest to purchase ads in Forbes magazine since that probably gets him invited back to the Highlander with its free drinks, exquisite dinners, and, if he’s lucky, some face time with women he’s already seen quite a bit of in Sports Illustrated. This is a tough spot, and there are two broad ways it can play out:
1. Foreman can do the parties at night, go home, sleep, wake up with a clear head, and buy the best ads for his client. Let’s say the advertising money he’s spending belongs to AT&T and they’re trying to attract new clients in the forty-five to fifty-five demographic of heavy cell phone users. He takes that target, checks to see what magazine those people like to read more than any other, and buys a full pager there. If the magazine happens to be Forbes, great, if not, then Forbes doesn’t get anything back for its party. In this case, Foreman knows he’s done right by AT&T and his employer. To the best of his ability, he guided advertising money to the spot where it’ll do the most good. There remains a potential problem here, however, which is the appearance of a conflict of interest. Even though Foreman didn’t let the parties affect his judgment, someone looking at the whole thing from outside might well suspect he did if it happens that Forbes gets the ad buy. This will be returned to later on in this chapter.
2. The darker possibility is that Forbes isn’t the best media buy, but they get the ad anyway because Foreman wants to keep boarding the Highlander. In this case, Foreman is serving his own interest but failing his obligations to his employer and to his client.
In pure ethical terms, the problem with the second possibility, with selling out the client, can be reduced to an accusation of lying. When Foreman or any employee signs up for a job, shows up for work, and then accepts a paycheck, they’re promising to be an agent for the organization, which is formally defined in commercial law as someone acting on behalf of the organization and its interests. In some situations it can be difficult to define exactly what those interests are, but in Foreman’s it’s not. He does well for his employer when he gives the clients the best advice possible about spending their advertising dollars. That’s his promise and he’s not fulfilling it.
Redoubling the argument, in the case of the typical media buyer, there’s probably also an explicit clause in the employment contract demanding that all media advice be objective and uncorrupted by personal interest. Even without that formal step, however, the shortest route to an ethical condemnation of buying ads because a night on the Highlander (or some other gift) has been received is to underline that the act turns the media purchaser into a liar. It makes him or her dishonest every time they come into work because they’re not providing the objective and impartial advice they promise.
In discussing conflicts of interests, it’s important to keep in mind that those who find themselves caught up in one haven’t necessarily been corrupted. Just because Foreman finds himself torn between giving impartial advice to his client and giving the advice that gets him good parties doesn’t mean his judgment is poisoned. That said, it’s extremely difficult to walk away from a conflict of interest unstained: any time serious gifts or rich entertainment gets injected into a business relationship, suspicious questions about professionalism are going to seep in too.
Finally, there are two broad ways of dealing with gifts, especially those creating conflicts of interest. They can be flatly refused, or rules can be formulated for accepting them responsibly.
Refusing Gifts and Entertainment
One way to avoid the gift and conflict of interest problem altogether for Chris Foreman or anyone in a similar situation is to simply refuse any gifts from business partners. Far more frequently than private businesses, government organizations take this route. The approach’s advantage, obviously, is that it wipes out the entire question of wrongdoing. The disadvantage, however, is that it dehumanizes work; it seems to forbid many simple and perfectly appropriate gestures of human interaction.
Here’s an example of what can happen when efforts to eradicate conflicting interests go to the extreme: it’s from a New York Times front-pager about the state governor:
Governor David A. Paterson violated state ethics laws when he secured free tickets to the opening game of the World Series from the Yankees last fall for himself and others, the New York State Commission on Public Integrity charged on Wednesday. Nicholas Confessore and Jeremy “Paterson’s Ethics Breach Is Turned Over to Prosecutors,” New York Times, March 3, 2010, accessed May 19, 2011, http://www.nytimes.com/2010/03/04/nyregion/04paterson.html?hp?hp.
So, the governor is in trouble because he got some tickets to watch his home team play in the baseball championship? That’s going to make Chris Foreman’s head swim. Without getting into the details of the Paterson case, accepting these tickets doesn’t seem like a huge transgression, especially for someone whose job pays well and is already packed with gala events of all kinds. It’s not as though, in other words, Peterson’s going to be blown away by the generosity or become dependent on it. In the case of Foreman who could barely afford to eat, it’s reasonable to suspect that he may come to rely on his occasional trip to the Highlander, but it just doesn’t seem likely that the governor’s judgment and ability to fulfill professional obligations are going to be distorted by the gift provided by the New York Yankees baseball club. More, as the state’s elected leader, a case could probably be made that the governor actually had a professional responsibility to show up and root for the home team (as long as the visitors aren’t the Mets). As a final note, since the now former governor is legally blind, the value of the gift seems limited since he couldn’t actually see the game he attended.
Despite this case’s apparent frivolity, the general practice of eliminating conflict of interest concerns by simply banning gifts can be justified. It can be because so many gifts, just by existing, create the appearance of a conflict of interest. An appearance of conflict exists when a reasonable person looking at the situation from outside (and without personal knowledge of anyone involved) will conclude from the circumstances that the employee’s ability to perform his or her duties may be compromised by personal interest. This is different from an actual conflict because when there’s really conflict, the individual feels torn between professional obligations and personal welfare. Almost certainly, Foreman was tempted to help out Forbes because he really liked the parties. But the case of Governor Paterson presents only the appearance of a conflict of interest because we don’t know whether he even wanted the tickets to the Yankees game. Given the fact that he’s blind, he may well have preferred staying home that night. Still, for those of us who can’t know his true feelings, it does seem as though there might, potentially, be some incentive for Paterson to return the Yankee favor and provide them some special advantage. It’s almost certain that at some time in the future, the baseball club will have an issue up for debate by the state government (perhaps involving the construction of a stadium or maybe just a license to sell beer inside the one they currently have), and as soon as that happens, the appearance of conflict is there because maybe Paterson’s response will be colored by the tickets he got.
Conclusion. Refusing to accept any gifts from business associates is a reasonable way of dealing with the ethical dilemma of conflicting interests. By cutting the problem off at the roots—by eliminating not only conflicts but the appearance of them—we can go forward with confidence that a worker’s promise to represent the organization faithfully is uncorrupted by the strategic generosity of others.
What Other Remedies Are Available for Conflict of Interest Problems Stemming from Gifts?
Categorically refusing gifts may be recommendable in some cases, but in most economic situations a total ban isn’t realistic. People make business arrangements the same way they make friendships and romance and most other social things—that means invitations to the Highlander if you’re lucky, or just to a few Budweisers in the hotel bar. And if you turn everyone down every time, it’s probably going to dampen your professional relationships; you may even lose the chance to get things done because someone else will win the contract between drinks.
So where does the line get drawn for accepting gifts with ethical justification? Whether you happen to be a renowned politician in a large state or someone just out of school trying to make a go of it in the world, there are a number of midpoints between Governor Paterson’s obligation to refuse tickets to a game he couldn’t see anyway and Chris Foreman’s raucous partying on the Highlander. Three of the most common midpoints are
1. transparency,
2. recusal,
3. organizational codes.
Transparency, as the word indicates, manages the acceptance of gifts by publicly recognizing their existence. The idea is that if Foreman is willing to openly acknowledge exactly what he’s getting from Forbes magazine, then we can trust that there’s nothing underhanded going on, no secret agreements or deals. Of course the gifts may still influence his judgment, but the fact that they’re public knowledge at least removes the sense that he’s trying to get away with something.
Recusal is abstaining from taking part in decisions contaminated by the appearance of a conflict of interest. Foreman could, for example, keep going to Highlander parties but not manage any media buying for the demographic that reads Forbes. It’s fairly easy to imagine a team of media buyers working together on this. Every time something comes up that might be right for Forbes, Foreman passes the decision on to Sam Smith or whoever and so removes himself from the conflict.
In the public sphere, especially politics and law, it’s common for judges and legislators to remove themselves from considering issues bearing directly on their welfare. A judge who owns stock in the Omnicom communications group may recuse herself from hearing a civil case brought against the company. Legislators deciding what the salary should be for legislators may ask for recommendations from an independent panel.
Organizational codes are one of the theoretically easiest but also one of the more practically difficult ways to handle gifts. The advantage of a code is that it can provide direct responses for employees trying to decide whether they can accept a gift. In Oregon, for example, legislators are prohibited from accepting gifts valued at more than fifty dollars. Assuming the code is reasonable—and in this case it was judged so by the state’s supreme court—legislators may assert that by implication accepting a gift valued under that amount is, in fact, ethical. Bill Graves, “Oregon Supreme Court Upholds \$50 Gift Limit for Legislators, Public Officials,” OregonLive.com, December 31, 2009, accessed May 19, 2011, www.oregonlive.com/news/index.ssf/2009/12/oregon_supreme_court_upholds_5.html.
However, the problem with codes is that, like laws, they frequently leave gray areas. That’s especially true in a media buyer’s world where so much is spent on entertaining. In that kind of reality, it’s very difficult to put a specific price on everything. A night on the Highlander, obviously, is worth a lot to Foreman, but how does it appear in the accounting books of dollars and cents? Because it’s hard to know, monetary limits provide only vague ethical guidance for those in Foreman’s line of work.
The broader lesson is that gifts come in so many forms—and with values that can be so difficult to accurately measure—that it’s virtually impossible to write something encompassing all the specific possibilities. Many codes of conduct, therefore, end up sounding noble but are really just saying, “Figure it out for yourself.” Take a look at the last lines from the Code of Conduct from Omnicom, a massive group of companies including many leading advertising firms that purchase ads in Forbes:
We expect each employee to exercise good judgment and discretion in giving or accepting any gift. No set of specific rules can anticipate or capture every possible instance in which an ethical issue may arise. Instead, all of us must be guided by the overarching principle that we are committed to fair and honest conduct and use our judgment and common sense whenever confronted with an ethical issue. “Code of Conduct,” OmnicomGroup, last updated October 16, 2008, accessed May 19, 2011, http://www.omnicomgroup.com/corporategovernance/codeofconduct.
Questions to Ask before Accepting a Gift
In their book Moral Issues in Business, authors William Shaw and Vincent Barry formulate a list of questions that, when answered, can provide support and clarity for making decisions about whether a gift may be accepted. They’re not going to tell you what to do—there’s no magic guide—but they can help you see things more clearly. In modified form and with some additions and subtractions, here’s the list.William Shaw and Vincent Barry, Moral Issues in Business (Belmont, CA: Thomson Wadsworth, 2007), 398–99.
• Is there a conflict of interest, or the appearance of a conflict, that arises because of the gift? Not every gift raises conflict of interest concerns. Maybe a marketer at Forbes gets a late cancellation for a Highlander night and can’t find any targeted media buyer to fill the spot, so the invite gets handed off to a buyer specializing in purchasing ads for young teenagers. Why not? It’d just go to waste otherwise. And should that lucky media buyer say yes? It’s difficult to find an ethical reason not to since no conflict of interest concerns seem to arise.
• What’s the gift’s value? This can be an easy one. When Foreman was invited to a Springsteen concert he could just look at the tickets and see that he’d been offered something worth \$500. On the other hand, getting the chance to chat up a Sports Illustrated swimsuit model on the Highlander is going to be harder to quantify. In those cases where a value can be set, the number allows a clean dividing line: anything above the a specified amount gets categorized as potentially influencing a decision and so causing a conflict of interest, while any gift worth less may be considered nominal, too small to threaten professionalism. What’s the magic number? That depends on who’s involved and the general context, but many organizations are currently setting it at \$25, which is, not incidentally, the limit the IRS sets for business deductions for gifts to any single person during one year.
• Is the gift provided out of generosity or for a purpose? No one can peer into the soul of another, but something offered during the holiday season may be more acceptable than the same thing offered just before a major advertising buy is being made.
• What’s the gift’s purpose? Just because a gift isn’t an outpouring of generosity so much as an expression of self-interest doesn’t mean there’s a corrupting intent. For example, if Forbes magazine sends Foreman a free copy of each issue, that’s more like advertising for themselves than an attempt to buy the guy off. Almost all of us have had the same experience: we’ve received calendars or notepads in the mail from a local real estate agent or insurance seller. These aren’t attempts to buy us, just ways to present their services. On the other hand, it’s hard to see how tickets to a Springsteen concert given by a magazine can be anything but an attempt to induce the receiver to give a gift back by throwing some ad money the publication’s way.
• Is it a gift or entertainment? Traditionally, a distinction has been drawn between giving gifts and paying for entertainment. As a rule of thumb, the former is something you can take home and the latter is enjoyed on the spot. Presumably, entertainment raises fewer ethical concerns because it isn’t a payoff so much as a courtesy extended to a media buyer in exchange for hearing a pitch. If someone from Forbes wants to convince Foreman that her magazine is the best place for advertising dollars, then it doesn’t seem so bad, buying him a lunch or a few beers while he hears (endures) the pitch. After all, it’s her job to sell the magazine and it’s his to know the advantages all the magazines offer. This is just normal business. Gifts, on the other hand, seem much more like bribes because they don’t exist in the context of normal business conversations. Take the tickets to a Springsteen concert; they have nothing to do with business and can’t be justified as a courtesy extended within the boundaries of normal exchanges between magazines and ad buyers. Finally, with respect to the parties on the Highlander, those are technically entertainment since Foreman can’t take the yacht home afterward. It doesn’t sound, though, like a lot of business talk was going on.
• What are the circumstances? There’s a difference between Forbes magazine handing concert tickets to media buyers to mark the launching of a new column in the magazine and their constant, ongoing provisioning. As part of the launch campaign, it’s much easier for Foreman to accept the gift without feeling trapped by an obligation to throw business Forbes’ way since he can respond to the gesture simply by being aware that the new column is there and taking it into account when he makes future buying decisions.
• What power do I have to bestow favors in return for gifts? Foreman’s job title is assistant media buyer, meaning he probably doesn’t actually decide which magazine gets the business. He just gathers research data and makes a recommendation to the boss. Does this free him to enjoy the Highlander nights guilt free? Hard to be sure, but it definitely helps him fulfill his professional obligations: it’s just much easier to do the data mining and recommendation writing in the back office than it is to be the guy sitting out front telling Forbes magazine the answer’s “no,” even though the parties were great. If that’s the way things go, Foreman may be a coward for letting his boss deliver the bad news to Forbes, but that’s a personal ethical failure, not a business one.
• What’s the industry accepted practice? In New York state government, as the Paterson case shows, the accepted practice is no gifts, period. In the looser world of Manhattan media business, New York magazine sums things up: “Everybody in our industry is guilty of it. Many of those who travel for work take their boyfriends and call it a vacation.” Sarah Bernard, “Let Them Eat Crab Cakes,” New York, accessed May 19, 2011, http://nymag.com/nymetro/news/media/features/2472. Care should be taken here to avoid the conclusion that whatever everyone else is doing is OK. That’s not it at all. But it is true that if everyone’s guilty—if all the magazines are lavishing gifts on media buyers, and all the buyers are accepting—it’s going to be much easier for Foreman to satisfy his professional obligations. It’s going to be easier for him to tell Forbes “no” (assuming the demographic facts recommend that) when all the magazines are gifting about equally and everyone’s accepting than it would be if Forbes were the only magazine giving the gifts and he was the only one accepting.
• What’s the organization’s policy? As the Omnicom Code of Conduct illustrates, sometimes policy provides words but no guidance. As the New York government policy (which prohibits all gifts) shows, however, sometimes there is guidance. When true guidance is provided, an employee may fairly reason that following it is fulfilling professional obligations to the employer.
• What’s the law? Generally, laws on gift giving and receiving apply to public officials and those working with them (politicians, judges, lawyers, businesses doing work for the government). As is always the case, the legal right doesn’t in itself make ethical right. It can, however, provide the foundation for making an ethically recommendable decision, assuming other factors—many of which will come up through the set of questions just listed—have not been ignored.
Conclusion. Gifts cause a conflict of interest when they threaten to corrupt an employee’s judgment on business matters related to the interests of the person or organization providing the gift. Sometimes gifts are given with that intention, sometimes not. Regardless, and no matter what the law or corporate philosophy may be, it’s frequently the employee who ends up deciding whether a gift will be accepted. If it is, a responsibility follows to justify accepting it.
What’s the Difference among Gifts, Bribes, and Kickbacks?
One advantage of the developed framework for thinking ethically about gifts in the midst of advertising business relationships is that it provides a compact way to manage the ethics of bribes and kickbacks.
Bribes are gifts—everything from straight cash to entertainment—given to media buyers with the direct purpose of corrupting their professional judgment by appealing to their personal welfare. When a representative from Forbes magazine gives Chris Forman tickets to the Springsteen show with the intention of spurring Foreman to consider buying ad space in Forbes, that’s a gift; it’s left to Foreman to decide whether he can accept it without betraying his obligation to serve his employer’s interests. When, on the other hand, the rep gives the same tickets with the intention of getting Forman to directly buy the space, that’s a bribe. A bribe, in other words, is an extreme conflict of interests where the individual’s personal interest completely overwhelms the professional responsibilities implied by his job. If Foreman accepts this kind of gift—one where he knows the intention and accepts that the objectivity of his judgment will be blinded—then he’s crossed into the zone of bribery. Receiving bribes, finally, seems unethical for the same reason that accepting gifts can be unethical: it’s betraying the promise to act as an agent for the organization.
Kickbacks resemble bribes except that instead of the gift or entertainment being given over first and then the ad space getting purchased, the ad space is purchased and then a portion of that revenue is sent back to the media buyer as cash or Springsteen tickets or whatever. Regardless of whether the media buyer gets his reward first and then buys the ad space, or buys the space and then gets rewarded, what’s happening on the ethical level doesn’t change. Personal interest is being exploited to corrupt professional judgment. That means accepting the reward becomes a form of lying since it’s a betrayal of the implicit promise made to do the job right when you sign the contract.
In the Real World, What’s the Difference among Gifts, Bribes, and Kickbacks?
In actual day-to-day business it can be extremely difficult to distinguish among gifts, bribes, and kickbacks because at bottom all of them spark conflicts of interest. All of them, consequently, are also going to incite at least remote suspicions of corruption. Of course it’s always easy to find examples at one extreme or the other. On the safe side, if a woman seeking your business pays for one cup of coffee for you once, it’s unlikely that you’ll give her proposal any special consideration, and it’s doubtful that she’d expect it. If she offers to make your car payments on the other hand, it’s pretty clear something’s going on. Usually, however, the lines are blurry and the reality more like the one Foreman lived through. The exact monetary value of what he received wasn’t certain. Did he get the invitations with the intention of having his judgment tainted or were they extended as a courtesy and in accordance with the industry’s common practice? Would he get more and better invitations if he sent Forbes magazine some extra dollars? While these questions don’t have certain answers, the ethics can be rendered in straightforward form. Agents of an organization have a duty to act in favor of the organization’s interests regardless of what happens after hours.
Key Takeaways
• Conflicts of interest arise when an individual’s professional judgment is challenged by an appeal to personal interest, as occurs when a prospective client offers a gift.
• Because suspicions of unethical practices arise almost immediately when a conflict of interest exists, even appearances of a conflict of interest present problems in business.
• Standard practices for dealing with gifts include outright refusal, acceptance of gifts with only nominal value, acceptance in accord with industry practices, and good sense within a clearly understood situation.
• In certain contexts, gifts of significant value may be accepted ethically, as long as they don’t corrupt professional judgment.
• Bribes and kickbacks can be managed ethically within the framework constructed for gifts. Both bribes and kickbacks function as gifts that do, in fact, corrupt an employee’s professional judgment.
Exercise \(1\)
1. Why do gifts create conflicts of interest?
2. What is the main advantage and disadvantage of dealing with gifts and conflicts of interest by prohibiting the acceptance of gifts?
3. What questions could you ask yourself to help frame the question as to whether you can ethically accept a business-related gift?
4. What’s the difference between a conflict of interest and the appearance of a conflict?
5. What’s the difference between a gift and a bribe?
6. What’s the difference between a bribe and a kickback? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/07%3A_Employee's_Ethics-_Making_the_Best_of_the_Job_You_Have_as_You_Get_from_9_to_5/7.01%3A_Taking_Advantage_of_the_Advantages-_Gifts_Bribes_and_Kickbacks.txt |
Learning Objectives
1. Define third-party obligations.
2. Elaborate three standard responses to third-party obligations.
3. Define whistle-blowing.
4. Consider justifications and requirements for whistle-blowing.
Caught in the Crossfire
A hypothetical situation. You work at Omnicom, at the desk next to Chris Foreman. Like him, you’re an assistant media buyer. Though your area of concentration is distinct (you’re in charge of placing ads on radio stations) you team up with him from time to time to run numbers, and you know enough about how it all works to recognize when something’s going wrong. In your opinion, it is. Chris is sending ads to Forbes that would deliver more for the client if they’d been placed in BusinessWeek. Further, you believe he’s doing it in exchange for the gifts. You can’t prove that but you do know this: he’s occasionally supplementing his lousy income by selling some of what he’s receiving—concert tickets, vouchers for limo service, things like that—on eBay. You’ve tried talking about it, bringing the subject up one way or another, but he doesn’t want to talk back. And when you say it directly, when you ask whether it’s right to accept gifts from Forbes and convert them to money, he laughs. “Everyone does it,” he says.
This situation is different from most of those discussed so far for an important reason: you’re not directly faced with an ethical dilemma; you’re not the one placing the ads or accepting the gifts. Still, you do work with Chris, sometimes even sending over marketing data that he uses for his accounts. You’re a third party, which in this situation means you’re not directly responsible for what’s going on but you’re caught in the cross fire between Foreman and Forbes magazine.
There are infinite variations on this kind of predicament. The financier-fraudster Bernie Madoff asked his secretary to cover up his affairs by answering his wife’s phone calls and saying he was in a meeting and couldn’t be interrupted. In the student union of your campus, maybe the breakfast menu offers omelets cooked with fresh eggs, but you work there and know the manager occasionally messes up the stocking order and so ends up selling omelets made from a preordered mix of egg-like chemicals. What do you do? It can be a hard call and at least two questions arise on the way to making it:
1. You need to decide if something truly unacceptable is happening.
2. You’ve got to determine whether it’s any of your business.
If, finally, something unacceptable is happening and you should do something about it, you’re facing a third-party obligation. This is an ethical responsibility to correct something you’re not actually doing.
Why Should I Get Involved? Ethics and Self-Interest
When confronted with a third-party obligation, employees may get involved for a number of reasons. One is as a response to an ethical responsibility. Another: as an opportunity to benefit themselves.
Tattling, as any child knows, is revealing an ethical transgression involving others, and revealing it for your own benefit. Take the case of assistant media buyer Chris Foreman and another assistant media buyer who learns that Foreman is shortchanging the ad agency’s client for personal benefit. If you’re that other assistant media buyer and you’re crafty, you may see not only an ethical lapse here but also your own personal chance. Every senior media buyer has several assistants underneath, and when the time comes for promotion, there’ll be space, presumably, for only one assistant to advance. Getting Foreman out of the way may not be a bad career move.
It’s an extremely ambiguous ethical move, however. On one hand, there’s solid justification for getting the truth known about Foreman. He’s clearly not fulfilling his professional obligations to the company. However, if you turn him in because that’ll give you a leg up on the promotion ladder, you can hardly say that ethical righteousness has driven your action. On the other side, this should also be noted: the fact that you may benefit from revealing unethical behavior probably can’t justify keeping everyone in the dark.
Typically, we think of ethical restrictions as painful, as obstacles you put between yourself and what you really want. That’s not always the case, though; they don’t necessarily make you suffer, they may make others suffer and serve your interests. When they do, you have weaponized ethics—that is, perfectly reasonable moral dictates used to attack others and benefit yourself. Tattling, finally, is the use of weaponized ethics, it’s doing the right thing for selfish reasons.
Responding to a Third-Party Obligation: Reporting
Regardless of the motivation for responding to a third-party obligation, there are two broad paths the response can take: reporting and whistle-blowing.
Reporting ethical transgressions means bringing them to light, but only within the organization. In most situations, this route is the most direct way for third parties to balance their basic and immediate obligations. Staying with the advertising scenario where you believe Foreman is essentially accepting bribes from Forbes, you have an obligation not only to halt the bribery but also to protect the agency’s interests. Obviously, a noisy public blowup about Foreman misspending a client’s money is going to damage the advertising company’s business. Reporting—because it stays inside agency walls—promises to rectify the bribery without causing larger publicity problems.
Bringing this into the real world, because reporting ethical problems does allow them to be addressed without harming the agency, the Omnicom Code of Conduct includes this:
All reports of possible violations about which management becomes aware will be promptly considered. We will not punish any employee or representative for making any report in good faith. “Code of Conduct,” OmnicomGroup, last updated October 16, 2008, accessed May 19, 2011, http://www.omnicomgroup.com/corporategovernance/codeofconduct.
It’s in Omnicom’s interest to get ethical dirty laundry washed in-house.
Up to here, the situation’s resolution has come easily. But there’s another, potentially complicating, obligation to consider: the human link to Chris Foreman. Almost all organizations rely on and seek to nurture bonds of shared responsibility and dependence between employees: in working life, when someone’s sick or just having a bad day, the others have to pick up the slack. That nurturing explains why anyone who’s entered a fast-food restaurant knows the workers aren’t “coworkers” but “teammates.” In most organizations, some form of the camaraderie holds, and you can’t just break those bonds from one moment to the next. That means if you’re working with Foreman and you know he’s doing wrong, you may well feel an obligation to not report anything because you don’t want to cause him problems. Reporting, the conclusion is, a coworker for ethical lapses is easy. But in the real world there are no coworkers; there are only flesh and blood people.
Next, even if those human connections to others don’t move you, you also have obligations to yourself and your own welfare to consider, and turning others in to company authorities can ultimately come back against you. By giving rise to distrust and possibly resentment among other colleagues who fear they may be the next ones to get reported, you may be in essence isolating yourself in your own cubicle.
In the end, seeing what Foreman is doing and stretching ethical obligations through the situation, you may find yourself torn between reporting him and not. There’s no automatic resolution to this dilemma, only the attempt to weigh the obligations and get a sense of which outweigh the others.
Responding to a Third-Party Obligation: Whistle-Blowing
Whistle-blowing is bringing ethical transgressions to light publicly outside the organization. A recent case involved one of the many advertising agencies gathered under the Omnicom umbrella, Leo Burnett. Two employees—Vice President Greg Hamilton and Comptroller Michelle Casey—alleged, and a subsequent federal investigation backed them up, that Leo Burnett was overbilling the government for their work on the US Army’s “Army of One” recruiting campaign.
The agency was supposed to calculate its hourly rate with a formula dividing charges between the more expensive work done directly in Leo Burnett’s offices and the less costly hourly labor performed by subcontractors. What Leo Burnett did was simple: they billed subcontractor work at the higher in-house rate. The accounting in these massive campaigns—TV, radio, and print ads as well as sponsorships and events—is so knotted that a virtual army of accountants is required to keep track of where all the money is going. In that kind of numerical chaos, the agency could expect that switching a few hours from one column to another deep inside the mountain of paperwork would go unnoticed by outside auditors. It did go unnoticed—until Hamilton and Casey told the government what was going on.
Almost inevitably a lot of dust gets kicked up when employees turn on their employers noisily and publicly. In this case, the US Justice Department lawyers rode in, and they probably wanted a scalp on their wall: they have limited resources, limited time and money, and when they take something on they want to win, and they want people to know about it. Back on the agency’s side, they’re going to defend themselves, and that typically entails attacking their accusers, maybe labeling them disgruntled, incompetent, or worse. In this case, there was also a tug-of-war over money. The agency obviously wanted to keep as much as it could, the government wanted money back, and thanks to the False Claims Act, Hamilton and Casey also demanded their share, which came to almost \$3 million.
The False Claims Act is a federal law designed to encourage whistle-blowing on private contractors who are attempting to defraud the government. Whistle-blowers are entitled, under the law, to 30 percent of the damages the government obtains. The incentive doesn’t apply to situations involving only private companies, but even there whistle-blowers may encounter suspicions that ulterior motives—not a dedication to doing the right thing—finally spurred their loud assertions about misdeeds.
Finally, with respect to the Leo Burnett fraud, the full details will never be known. Because the case never went to trial, there was little public exhibition of evidence and testimony. To head the whole mess off, Leo Burnett agreed to settle. In the words of a published report, “Leo Burnett denied any wrongdoing and said in a statement that it agreed to the settlement ‘to avoid the distraction, burden and expense of litigation.’ ”Mehhen Streit, “Leo Burnett Settles Suit for \$15.5 Million,” Chicago Business, January 6, 2009, accessed May 19, 2011, http://www.chicagobusiness.com/cgi-bin/news.pl?id=32498.
Every case of whistle-blowing is different, but a few questions get to the heart of most instances:
• What, exactly, is whistle-blowing?
• What justifies whistle-blowing?
• What weighs against whistle-blowing?
• Can the whistle-blower expect protection?
• Is whistle-blowing morally required?
What Is Whistle-Blowing?
Whistle-blowing is bringing an organization’s ethical transgressions to public light. Spilling the beans to the family over dinner, however, doesn’t count; the truth must be exposed to an authority or institution capable of taking action. In the case of the advertising agency, Hamilton and Casey took their information to the federal government. They also could have selected one of the important industry publications—say, Advertising Age magazine. Any information published there would draw attention from those involved and give the client (in this case the US Army) the opportunity to act on behalf of its own interests. The news media—a newspaper, a TV station—may have been a possibility in this case, given the large scope of the fraud and the national interest underneath it. Other possibilities could be listed, but what’s important is that the report of misdeeds goes to someone who can do something about it (or at least provoke others to do something). Finally, whistle-blowing may be anonymous. However, in practical terms, that’s frequently not a real option because government authorities, like private ones (editors of industry publications and so on), are far less likely to spend time tracking down the truth about accusations when even the accuser is unwilling to stand behind them.
What Justifies Whistle-Blowing?
Whistle-blowing needs careful justification because it requires violating the obligation any employee has to protect the interests of the employer. Here are five items that could be checked before publicly lighting up an organization’s misdeeds from the inside. Importantly, the fact that the items may all be checked doesn’t oblige action, but it does raise the possibility as ethically justifiable.
1. There is clear evidence of continuing wrongdoing by the organization or continuing effects of past wrongdoing. In the business world, actions that are entirely locked in the past are the subject of history, not ethics.
2. The wrongdoing must be serious. In the case of Leo Burnett, the case wouldn’t cross this threshold if only one hour of labor had been attributed to the higher-cost office. But the threshold would be crossed if the agency significantly overcharged many hours for years, bleeding the account of its resources and ultimately damaging the army’s ability to recruit new, top-flight soldiers.
3. The organization’s established, internal channels for reporting and correcting problems have been exhausted. Most organizations provide clear ways for employees to voice concerns internally. A conversation with a supervisor is an obvious example. At larger organizations, sometimes an entire internal department has been mounted to receive and act on the concerns of employees. Here’s the web page of a typical example; it links to Walmart’s internal department for ethics: ethics.walmartstores.com/Statementofethics/RaiseAConcern.aspx. Whether, finally, there’s a clear, formal route for internal reporting or not, employees have a responsibility to try to resolve problems in ways that benefit—or do the least possible damage to—the organization, and therefore the possibility of raising concerns internally needs to be explored fully. (As always, there are special cases. If, for example, the CEO of a small advertising company is robbing its client’s money, there may be no internal route to resolution, leaving external whistle-blowing as the only moral corrective. Also, though whistle-blowing is defined as taking action outside the organization, the definition could be stretched to include the act of bringing wrongdoing to light directly before high officials within an organization by skipping over the normal chain of authority.)
4. There’s unmistakable and convincing evidence of misconduct. The evidence must be unmistakable in the sense that it clearly indicates wrongdoing; it can’t be that an innocent explanation seems as likely as a guilty one. In the Leo Burnett accounting books, if it turns out that on one page all the internal hours are in the external hours column and vice versa, that may be an attempt to defraud the government, or it may just be that the data-entry guy came to work one morning hung over and ended up confusing the numbers. Further, the evidence must also be compelling in the sense that there’s enough of it for a reasonable person to conclude the misdeeds are actually occurring. So even if you’re certain numbers are being entered incorrectly intentionally, but it turns out that the difference—the amount of extra money Leo Burnett is making—is trivial, then it’s going to be hard to justify creating a stink. It may be, for example, that someone in the accounting department is making small adjustments in order to balance errors found elsewhere in the giant balance sheet.
5. There’s reason to believe that whistle-blowing will resolve the problem. In the case of Leo Burnett—or any business that’s overcharging a client—you can be pretty sure that bringing the fraud to light will spark action, at least by the defrauded client. On the other hand, if you’re in the production department of the advertising agency (in other words, you’re actually filming commercials) and you regularly get shipped down to Mexico to shoot campaigns because everything’s cheaper down there and you learn that some of the extras in the commercial’s background are working longer hours than local regulations allow, you might reasonably figure that you can talk all you want in public, but it’s not going to make any difference.
What Weighs against Whistle-Blowing?
The three heaviest arguments against whistle-blowing are
1. legal requirements for confidentiality,
2. prudential concern for one’s career and personal welfare,
3. an employee’s sense of loyalty to the organization.
A legal requirement for confidentiality may weigh against whistle-blowing by binding employees to not share a company’s internal information. The requirement traces back to a section contained in many work contracts. Called a confidentiality clause, here’s a basic version:
Employees may have access to records and other information about customers and other employees, including proprietary information, trade secrets, and intellectual property to which the Company holds rights. Employee agrees to keep all such information strictly confidential and to refrain from discussing this information with anyone else without proper authority.
While this is most directly aimed at protecting consumer information (say, credit card numbers) and company trade secrets (Coke’s secret formula), it may also be read as safeguarding the kind of information a whistle-blower wants to make public. In the case of the Leo Burnett agency, what Vice President Hamilton and Comptroller Casey told the government did, in fact, involve “records and other information about customers.”
The second major argument against whistle-blowing, self-interest, operates in both the professional and personal sense. Turning against the company may be the right thing to do, but it’s almost inevitably a painful thing to do, at least according to a survey published in the New York Times. What condition, the study sought to determine, do whistle-blowers find themselves in a few years afterward?
• One hundred percent who worked for private business were fired.
• Twenty percent could still not find work at the time this survey was taken.
• Seventeen percent lost their homes.
• Fifty-four percent had been harassed by peers at work.
• Fifteen percent viewed their subsequent divorce as a result of whistle-blowing.
• Eighty percent suffered physical deterioration.
• Eighty-six percent reported significant emotional stress (depression, anxiety).
• Ten percent reported having attempted suicide. Survey cited in Manuel Velasquez, Business Ethics: Concepts and Cases, 6th ed. (Upper Saddle River, NJ: Pearson, 2006), 378.
It doesn’t sound good. Of course every case is different, and if you look on the other side of these numbers, they leave room for the possibility that at least some people do the right thing and get on with their lives just fine. Still, there are no guarantees and ethics isn’t only about duties to others and the world outside, all of us have equal duties to ourselves: duties to maximize our potential, protect those nearest to us, and defend our own welfare.
Finally, the values and reasons supporting loyalty as a reason for not blowing the whistle will be considered in their own section further on.
Protecting the Whistle-Blower
As the survey data about whistle-blowers reveal, there’s not a lot of protection for them. That isn’t for a lack of trying, however. At both the state and federal levels, reams of laws have been enacted to protect those who expose wrongdoing organizations. Perhaps the most notable is the Sarbanes-Oxley Act. Passed in 2002 by the federal government as a response to a series of disastrous accounting frauds at large companies, Sarbanes-Oxley is a massive piece of legislation intervening in many parts of the business world, and especially in aspects connecting to an organization’s finances and transparency.
Specifically with respect to whistle-blowers, the law attempts to encourage it by protecting whistle-blowers at publicly traded companies that report activities to government agencies. (The act doesn’t apply to privately held firms dealing exclusively with other private firms.) Employers are prohibited from taking retaliatory action (firing, demoting, harassing), and whistle-blowers are provided clear avenues for lawsuits should such retaliation occur. Here’s the legislative language: “In order to establish a case under Sarbanes-Oxley, an employee must prove that she (1) reasonably believed that her employer was breaking the law; (2) engaged in whistleblowing activity as defined by the statute; (3) suffered an adverse employment action; and (4) that there was a causal connection between the whistleblowing activity and the adverse employment action.” Welch v. Cardinal Bankshares Corp., 2003-SOX-15 at 35 (ALJ 2004).
The problem is that last clause. Everyone who’s ever had a job knows that mistakes happen every day. Deadlines are missed, projects contain errors, goals aren’t met. Bosses who have it in for you aren’t going to have many difficulties converting those mishaps into reasons for denying wage hikes and even outright firing. In your heart you may know—everyone may know—that you’re suffering retaliation for reporting the company, but proving it can be difficult.
The bottom line is—and as the previous survey shows—if you publicly divulge information seriously damaging your employer, you’re probably going to be gone. And even if you find some protection in one or another law, it’s difficult to imagine that your career is going anywhere inside the company. Worse still, prospective new employers are, very likely, going to hesitate before extending a job to someone who has already caused serious problems for a former employer. Taken all together, the bleak reality is that in most cases whistle-blowers can’t count on getting back the life they had before they publicly disclosed their organization’s misdeeds.
Is Whistle-Blowing Morally Required?
Given the abundant reasons—financial, professional, emotional, and ethical—against whistle-blowing, are there any cases where a moral argument can be formed to require publicizing an organization’s unethical actions? Probably, but they’re few. Here’s a possible rule of thumb: whistle-blowing is required when the act can prevent harm to others in ways that are serious and go beyond the bottom line. If someone is getting ripped off, the reasoning goes—if an advertising company is overcharging its clients—whistle-blowing may be justified, but not required. All that’s at stake is money. On the other hand, if a nuclear power plant is being constructed near a residential area and you learn the contracting company you work for is using cheap cement to boost the profit margin, it seems as though you have little choice—the weight of elementary personal integrity in the face of potentially lethal wrongdoing probably requires personal sacrifice.
What about the hypothetical Chris Foreman situation? You’re working with him and have acquired sufficient evidence to know that he’s selling out his client by sending their ad dollars to Forbes magazine in exchange for Highlander nights. You’ve reported the matter internally and received no response. Do you go public? You’d certainly be justified in taking the story to Ad Age magazine. Just running down the list of conditions justifying whistle-blowing, they all get checked:
1. There’s clear evidence of continuing wrongdoing by the organization.
2. The wrongdoing is serious (at least in the world of advertising).
3. The organization’s established, internal channels for reporting and correcting problems have been exhausted.
4. There’s unmistakable and convincing evidence of misconduct.
5. There’s reason to believe that whistle-blowing will resolve the problem.
The question remains, however, whether the issue affects life beyond business and the bottom line. It doesn’t appear to. At bottom, this is the case of a client—AT&T mobile phone services—getting poor service from an Omnicom company. That should be corrected, and presumably market forces will correct it sooner or later, but whether they do or don’t, there’s no requirement here to seriously jeopardize your own financial, professional, and emotional welfare.
What about the case of Leo Burnett? Again here a client is getting a raw deal, but there’s an important difference: this is the army, not a telephone company. If it’s true that the recruiting budget is being seriously hindered, the situation may be crossing the line from justified whistle-blowing to justified and required. If it does cross that line, the reason will be that protecting your own financial and emotional welfare is trumped by the responsibility to help soldiers in war resist mortal danger as totally as possible. The fact that the army isn’t getting the best recruits possible doesn’t just affect people in the pocketbook, it threatens those on a live battlefield. Faced with that reality, it will be hard for individuals including Burnett employees Hamilton and Casey to keep quiet just because they don’t want to lose their jobs.
Key Takeaways
• Third-party obligations arise when you know of wrongdoing by an organization or by individuals within it, and though you aren’t directly at fault, you’re in a position to correct the problem.
• In some cases, third-party obligations can be opportunities to sabotage a fellow worker for personal gain.
• Responses to third-party obligations include reporting the problem inside the organization for correction and publicizing the problem, also known as whistle-blowing.
• Because whistle-blowing harms the organization, employees must take into account their responsibility to defend the organization’s interests before publicly decrying the wrongdoing.
• In some cases whistle-blowing is not justified, in some it is, and in some extreme cases, whistle-blowing may be ethically required.
• In practical terms, whistle-blowing can be devastating for the employee.
Exercise \(1\)
1. Create a hypothetical third-party obligation involving an employee of a major company.
2. What does it mean to deploy weaponized ethics?
3. What questions can be asked to help determine whether whistle-blowing is justified?
4. What questions can be asked to help determine whether whistle-blowing is ethically required?
5. Why might an employee hesitate before whistle-blowing?
6. The Sarbanes-Oxley Act tries to protect whistle-blowers. Why is it not very effective? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/07%3A_Employee's_Ethics-_Making_the_Best_of_the_Job_You_Have_as_You_Get_from_9_to_5/7.02%3A_Third-Party_Obligations-_Tattling_Reporting_and_Whistle-Blowing.txt |
Learning Objectives
1. Define company loyalty.
2. Elaborate three degrees of company loyalty.
Two Kinds of Loyalty
There is narrow company loyalty and broad company loyalty. The narrow definition pertains to employment: the loyal employee sticks with the company instead of looking for work elsewhere, especially during economic booms when jobs are plentiful and moving on is easy.
This kind of loyalty, however, is in trouble according to an article from the Harvard Business School: “The very nature of the relationship between employers and employees has undergone a fundamental shift: Today, workers not only don’t expect to work for decades on end for the same company, but they don’t want to. They are largely disillusioned with the very idea of loyalty to organizations.” Lauren Keller Johnson, “Rethinking Company Loyalty,” Harvard Business School Working Knowledge, September 19, 2005, accessed May 19, 2011, http://hbswk.hbs.edu/item/5000.html.
Part of the reason for the shift—and part of the reason employees don’t stay at companies for decades—is that many employers don’t hesitate to fire their workers at the drop of the hat when it serves the company’s interest. On the other side, according to the article, it’s also true that today’s workers don’t hesitate to move on to a new job when a better one, or maybe just a different one, comes along. Regardless of who went first, the fact is company loyalty—whether it’s going from the company to the worker or the worker to the company—isn’t what (we are told) it once was.
The broad definition of company loyalty goes beyond employment questions and measures an employee’s willingness to sacrifice income, leisure time, personal relationships, family responsibilities, and general life aspirations in the name of the organization. To create this dynamic of sacrifice, two distinct kinds of relationships with the organization are required:
1. Attachment to the organization that is noninstrumental. This means the attachment isn’t maintained only because it serves the employee’s concrete interests, such as the need for a salary to pay the rent and grocery bills.
2. A deposited value in the organization that goes beyond any individual and their attachment; the organization’s value continues even without those who currently feel it.
Probably, there’s not a lot of this kind of deep loyalty in the advertising field. Agencies are constantly stalking new clients, even trying to steal them from others. For their part, most clients are constantly looking for better deals and ways to refresh their image, and they are usually open to proposals from new firms interested in handling their communication. More, companies that employ advertising agencies constantly “put their account up for review,” which means the current account holder has to compete with new entrants just to maintain the business. There are exceptions, of course, but for the most part advertising agencies are constantly clinging to the business they have, seeking new opportunities, and always on the lookout for fast money. In that kind of cutthroat environment—one where it’s your job to sing the praises of Burger King one day and McDonald’s the next—it’s going to be difficult for workers to feel as though they should (or even can) be true to their current employer.
Other kinds of organizations seem more likely to instill feelings of loyalty. A religious hub—a church, a synagogue, a mosque—is one obvious example. Most priests are attached to, and deeply concerned by, the welfare of their church; they serve their institution and aren’t working there for the money (which probably isn’t great). Further, most also believe their institution has value beyond them: the importance was there before they arrived (or were even born) and will continue after they leave. Taken together, these elements create space for true employee loyalty to the organization. Something similar—the existence of a space for labor that’s not about money and similar rewards—could be found surrounding many who work for Greenpeace, Doctors Without Borders, political parties, the CIA, the United Nations.
Other professions open on both sides of the line—that is, there’s ample space for an instrumental relationship (I keep this job because it makes me happy) and one based on broad loyalty. Some medical doctors are in it for the money but others for the care, for the principle that bringing health to others is a good cause. Law is another example. Ambulance-chasing lawyers just want payoffs, but some judges believe in the law as something larger than themselves and a basic force for civilization that’s worth serving. Moving down to street level, there are police officers who just like a steady paycheck and others in the field to serve and protect: they see their work as improving the lives of others and the general community.
Three Degrees of Loyalty
Within a dynamic of employee loyalty, there are three levels of dedication: obedience loyalty, balanced loyalty, and free agency.
Obedience loyalty, which is an extreme case, works from the idea that the organization is worthy and the employee is comparatively worthless or only worthwhile to the extent he or she serves the organization. This extreme will be reached only rarely, but there are glimmers of it in some professional activities. One quick way to identify these kinds of labors is to check whether the truly dedicated are willing to sacrifice even their lives for the cause their organization embodies. The armed forces come to mind here. Some political organizations command this devotion, especially in revolutionary times. Some workers’ devotion to their labor union has been sufficient to put their lives in danger. The exploring scientist Charles Darwin believed in accumulating knowledge and put his life at risk in the field as he tracked rare species and ecosystems.
Not so dramatic or extreme, some professions and organizations can suck the emotional life out of employees. Or they may take vast chunks of the employee’s time. Undercover police work exemplifies by requiring a loyalty reflected as self-sacrifice to an extent few of us would contemplate. April Leatherwood, for instance, went undercover in Memphis for an entire year. Almost entirely separated from family and friends, she lived on the street, wore the same clothes every day, went without brushing her teeth, and rarely bathed. That was an ugly year of her life, one sacrificed for the job. Kristina Goetz, “A Year of Living Dangerously Takes a Toll on Undercover Memphis Officer,” Commercial Appeal, August 30, 2009, accessed May 19, 2011, www.commercialappeal.com/news/2009/aug/30/year-of-living-dangerously-takes-its-toll.
Balanced loyalty is a situation where both the employee and the organization recognize in each other an independent value. In this case, the employee can be expected to make sacrifices—possibly even do things he or she would normally consider unethical—in the name of serving the larger organization. One example would be a lawyer working in a public defender’s office, one who believes that the system of law and the rules of its enforcement are noble and should be respected to some important extent that is independent of the particular lawyer’s welfare and beliefs. The loyalty can be reflected in a number of ways. First, it’s simply the case that most public defender positions don’t pay as well as similar posts in private firms. Pushing further, the public defender may be asked to represent and defend a client she knows (or strongly suspects) is guilty. In this case, presumably, she’s being asked to do something she wouldn’t do in her day-to-day life—that is, serve the interests of a guilty man. More, presenting a full-blown legal case for the defendant’s innocence would essentially be lying and, again, something the lawyer might not typically do.
At the same time, this lawyer probably won’t be sacrificing everything; she’ll recognize that her life and aspirations have value also, and there may come a point where she decides the sacrifices demanded by the job are too great to bear. Perhaps she’s just had a child and needs to up her income, or, maybe a man she helped set free has committed a gruesome crime. However the situation might be, when the lawyer leaves the office of the public defender for a higher paying job at a large private firm, she has demonstrated a balanced sense of loyalty. She’s willing to sacrifice in the name of a larger organization she respects. But only up to a point.
Other demonstrations of balanced loyalty to the organization could include
• buying the company’s products (though they aren’t the personal preference),
• evangelizing in public life (telling your friends how great the company or its products are),
• voting for the political candidate the company affirms will best serve its interests,
• moving for the company.
Free agency is the extreme on the bottom end: the absence of loyalty. Some theorists propose that this should be the default state for most employees for this reason: it’s ultimately impossible to be loyal to a typical company because profit-making institutions just aren’t the kinds of things that can properly demand or receive any loyalty. The entire idea of loyalty, the argument goes, only exists in a reality where individuals stand by others to some extent without conditions (example: parents who love each other and their children unconditionally). Money-making businesses, on the other hand, are incapable of that kind of unconditional fidelity. On the contrary, the only desire most private enterprises know is the one to serve its own interests by making more profits. If that’s right—if companies have no loyalty to give—then its employees can’t enter into that kind of relationship. Instead, in the business world at least, you and I are forced to pursue our own interests—a higher salary or whatever—just as the larger company pursues its own.
Translating this into the working world, the absence of company loyalty is the idea that workers find value in their organization only because it serves their own interests. Of course it’s impossible to know the souls of others, or exactly what their deepest values are, but there might be a hint of this free-agent loyalty in the Leo Burnett case. Two high-level and highly paid workers served the company well—and were compensated well—until they turned whistle-blower against the firm. When vice president Hamilton and comptroller Casey alleged that Leo Burnett was overbilling the government for their work for the US Army, they weren’t just doing the right thing, they were doing a lucrative thing for themselves since the False Claims Act promised 30 percent of damages the government obtained. If the money is the reason they turned on the agency, they exemplify free-agent loyalty. They worked hard for the organization because the pay was good, but the moment they saw the chance to get even more money by turning against it, they jumped. At bottom, that means, their loyalty is only to themselves.
Key Takeaways
• Company loyalty defined narrowly concerns employees sticking with the organization instead of looking for work elsewhere.
• Company loyalty defined broadly emerges from the idea that the organization possesses nobility that’s worth serving, even if employees don’t benefit personally from the contribution.
• The three degrees of company loyalty are obedience loyalty (the worker exists to serve the organization’s interests), balanced loyalty (workers and organizations share interests), and free agency (the organization exists to serve the worker’s interests).
Exercise \(1\)
1. Name an organization that might inspire obedience loyalty. Why is obedience inspired? What does the loyalty look like?
2. Name an organization that might inspire balanced loyalty. Why is it inspired? What does the loyalty look like?
3. Name an organization that might inspire an attitude of free agency. Why is it inspired? What does the free agency look like?
4. Take a career you’re (considering) pursuing. On the scale from obedience loyalty to free agency, where do you imagine most employees in that line of work are located? Why? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/07%3A_Employee's_Ethics-_Making_the_Best_of_the_Job_You_Have_as_You_Get_from_9_to_5/7.03%3A_Company_Loyalty.txt |
Learning Objectives
1. Consider ethical questions attached to several issues commonly arising during the workday.
Bringing the Office Home: High-Stress Work
No book can cover the ethics of everything happening on every job, but four issues arising in most workplaces sooner or later are stress, sex, status, and slacking off. Starting with stress, what happens if the workday doesn’t end when the workday ends? For those enduring—or choosing—high-stress jobs, there’s no five o’clock whistle; even if they’re shopping or watching a baseball game, the job’s effects hum in the background. One simple example—and also one all of us see on the street every day—comes from an article in the USA Today. It recounts an academic journal’s finding that overweight people pack on still more pounds when their work continually produces serious anxiety. If you’re overweight, the study shows, and you’re stressed in the office, there’s a high likelihood your stomach or your thighs are going to keep growing. Nanci Hellmich, “Study: Overweight People Gain More When Stressed by Work,” USA Today, July 8, 2009, accessed May 19, 2011, www.usatoday.com/news/health/weightloss/2009-07-08-obesity-stress_N.htm.
One of the central arguments Aristotle made in ancient Greece was that doing right isn’t the highest goal of ethics. The careful understanding of our values and purposes centers on, ultimately, living a good life. Doing the right thing is part of that goodness, but happiness is there too, so one of the issues stress at work brings forward is this: how is my decision to accept stressful employment affecting my happiness and the happiness of those around me? Here are some more specific questions that could be asked on the way to pinning down the ethics of stress:
• What positive returns, exactly, am I getting from my stressful job?
• Are there prospects for reduced stress in the future?
• What are the costs of the stress? Is it affecting my weight, my leisure time, my friends, my marriage and family?
• Who is affected? Is anyone else suffering stress because I’m stressed out? Are people suffering from my stress in other ways?
Stress at work isn’t only a psychological problem or a medical one—it’s also laced with questions about value. It’s the most fundamental ethics: what’s worth doing and what isn’t? It’s impossible to know, of course, exactly where the line should be drawn and when stress is worth accepting. Any answer that will be justifiable, however, will have to begin with a clear understanding of exactly what the costs and benefits are.
Office Romance
Hooking up at work is one eternal way of making the time fly, but what’s going on in today’s offices is somewhat different from the past. An article from the Wall Street Journal indicates how the meaning of sex in the office is shifting: “Marriage is a priority for most Americans—more than 90 percent of American adults eventually marry—but these days it may not happen, as it so often did before, in the immediate post-high-school or post-college years. The truth is that we’re marrying later.” Christine Whelen, “Older but Wiser,” The Wall Street Journal, November 3, 2006.
When marriages were typically celebrated at the end of the schooling years, work-related romances went hand in hand with infidelities. In that environment, questions arose about the organization’s role in any affair that may be occurring during company time.
The entire context of discussion changes, however, when a large number of people flowing into the workforce are unmarried and are looking to wed. Inevitably, the office is going to become a mating ground—people pass eight hours a day there—and one of the questions young workers are going to start asking when they think about jobs and careers is, will I be able to meet someone if I get into one or another line of work?
The aspiration to connect introduces a thorny dimension to employment decisions made by young people (and some older ones too). If you’re a guy working on a heavy construction job, the pay may be good, but there’s probably not going to be a woman in sight. On the other hand, doing the coursework to earn paralegal certification may be a headache, but getting into the field isn’t a bad way to meet successful and interesting women.
What’s going on here is that as society changes—as marriage and family life get pushed back into time that used to be reserved for work—the factors shaping the way we think about which jobs are more desirable than others simply on a day-to-day basis are changing, and part of your responsibility to yourself is to keep track of what you really want from your 9 to 5 time. One of the standard moral obligations we share is the responsibility to be sincere not only with others but also with ourselves about important decisions touching the business part of life. And if romance is part of what you want from work, then the possibilities have to be taken into account just like salary and other benefits.
Status
Chris Foreman, the media buyer who enjoyed yacht evenings on the Highlander and tickets to all kinds of major events, received a piddling salary. He thought about changing jobs but decided not to. One reason was that all the entertainment added a lot of indirect money to his income. There was another reason too—the special, VIP privileges he constantly received from his benefactors: “There’s a feeling of superiority. When you pass by a line at a screening because you’re on the list you do get that ego boost. You’re thinking, Ha, ha! I’m not a chump.” Sarah Bernard, “Let Them Eat Crab Cakes,” New York, accessed May 19, 2011, http://nymag.com/nymetro/news/media/features/2472.
Status on the job makes a difference in quotidian working life, but it’s hard to quantify; it’s not like a salary, which is an objective number and can be directly compared with others on a pay scale. How much is it worth, the question is, to wing by others forced to stand in line?
Knotting matters further, defining exactly what counts as status isn’t easy, and any answer is going to move and slide depending on who you talk to. For some, being a lawyer is impressive and lucrative, for others it’s dirty and, well, lucrative. For some, being a test pilot is exciting and respectable, for others it’s scary and weird. Many people seated in first class on an airplane rush to get on early so that all the economy travelers get to see them as they file past. Some of those people headed toward the back of the plane see the first-class passengers as legitimate power elites, but others get the feeling that most of them are really chumps: the reason they’re in first class is because they used frequent-flyer miles to bump up, and the reason they have a lot of those is because their bosses always make them take the trip to see clients instead of bothering to do it themselves.
More generally, in the world of New York City media buyers, status seems linked with superiority, with being visibly more privileged than those forced to stand in lines. For others, however, status will be quieter. The teacher, the nurse—they find status not as superiority but as social importance.
Conclusion. Status means different things to different people, but anyone looking to get it from a job should ask how much is really there, and how much is it going to help me get out of bed in the morning and want to go to work?
Slacker’s Paradise
Typical ways of getting through the day include throwing yourself into your work (frequently with the hope of a promotion or pay raise), firing up an office romance, and enjoying the status a post allows. Another way of making it from 9 to 5 is by trying to avoid doing work, by working to do as little as possible. This is the slacker reality, and there are two routes into it: Personal slackers adopt the attitude for their own private reasons. The context slacker is dedicated to not working because the incentive system of the labor contract—or some other external factor—encourages slacking off.
Beginning with the personal slacker, the attitude starts with a decision: You take a typical job and make it your project to expend as little effort as possible. The reasons for adopting this stance depend on the person. Maybe there’s a passive-aggressive element, some personal frustration with life or perhaps a somewhat idealistic attempt to make a statement. In any case, the motives behind this kind of behavior should be pursued in a psychology course. Here all that matters is that for one reason or another the private decision gets made to get through the day by working to not work.
The second slacker pathway starts with a context. Here’s an example from an online discussion board: “Haha I worked in a union job and they were there to punch in…take a lunch…take 2 15min breaks…and punch out. They had 0 incentive to work hard because they would get a 0 dollar raise.” Eazy E, “IS it me or are most Union workers lazy?,” Yahoo! Answers, accessed May 19, 2011, answers.yahoo.com/question/index?qid=20081008004353AAn1iL7.
The key here is the incentive, the idea that working hard doesn’t benefit the worker because labor agreements are so protective and constricting that, on one side, it’s almost impossible to fire a worker, and on the other, it’s nearly impossible to reward one for superior performance. That means there are islands in the general economy where the traditional rule regarding performance and reward—the rule that doing well gets you ahead—doesn’t apply very well.
One of the curiosities of these islands is that it’s not right to conclude that there’s no incentive to do anything. Actually, there is an incentive system in place even when, as the discussion board poster writes it, “hard work gets a 0 dollar raise.” In this case, the incentive is negative. If union rules (or whatever rules happen to be in effect) mean workers can’t compete against each other with the best performer winning a better post, the workers can still compete. It’s just that since wages are fixed, the competition turns negative: the most successful worker is the one who manages to do the least work. It makes perfect sense: if you do less work than anyone else, and you’re paid the same amount as everyone else, you have, in fact, found a way to win. You get the highest salary; you’re the one paid most for the least work.
Is slacking ethically acceptable? Whether someone is a contextual or personal slacker, when success is defined not as how well you do but how little you do, two basic questions arise:
1. Is someone or some organization being cheated?
2. Is there something fundamentally unethical about being a slacker?
The first question applied to those trapped—willingly or not—in contextual slackerism leads quickly to the conclusion that the organization bears at least as great a burden of responsibility as the employee for deficient work motivation. Applied to the personal slacker, the question about whether an employer was cheated becomes more difficult. There does seem to be an element of reneging on implicit or explicit pledges to fulfill responsibilities here, but it’s also true that most employment contracts in the United States (though not so much in Europe where this question would require more prolonged consideration) leave the organization broad latitude for dismissing workers whose performance is inadequate.
Next, is there something fundamentally unethical about slacking off? Most basic ethical theories are going to return some form of a yes verdict. From a utilitarian perspective—one trying to maximize the common good and happiness—it seems like problems are going to arise in most workplaces when coworkers are forced to pick up assignments the slacker was supposed to complete or could have completed easily with just a bit more effort. Similarly, basic ethics of duties include the one we all have to maximize our own potential and abilities, and rigorously avoiding work seems, in most cases, to run against that aspiration. Probably, a satisfying ethical defense of the slacker lifestyle would need to be founded on a personal project going well beyond the limited economic world. Slacking off, in other words, would need to be part of someone’s life ambition, and therefore its questions belong to general ethics, not the more limited field of economic values treated here.
Key Takeaways
• Stress at work invites ethical considerations of workers’ obligations to their own happiness.
• Office romance may broaden the range of values applying to career choices.
• Status deriving from one’s work can be an important compensation, but it is difficult to quantify.
• Slacking off—working to not work—may result from an employee’s work environment or it may be a personal choice.
Exercise \(1\)
1. What are some of the ways stress at work can cause unhappiness in life?
2. Why is the office an important scene of romance in today’s world?
3. What do you imagine the rewards of status to be?
4. What kind of work contract would encourage slackerism? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/07%3A_Employee's_Ethics-_Making_the_Best_of_the_Job_You_Have_as_You_Get_from_9_to_5/7.04%3A_Stress_Sex_Status_and_Slacking-_What_Are_the_Ethics_of_Making_it_Thro.txt |
Payola and the iPhone App
Source: Photo courtesy of Cat Sacdalan, www.flickr.com/photos/permanent3rdgrade/3509251547/.
The word payola traces back to rock and roll’s early days, back when the only large-scale way new acts could get their name and music out was on the radio. Deejays in the 1960s controlled their own playlists much more than today, so a band could drive into town, play a few concerts, and pay off a few deejays to get their songs into the rotation. When they rolled out toward the next stop, they left behind the impression that they were the next big thing.
It’s not illegal for a deejay, radio station, or anyone at all to accept money in exchange for playing someone’s music, but US law does make pay for play illegal if the sponsorship isn’t openly divulged, if the song isn’t treated, in other words, as a commercial.
Today’s media world provides almost infinite ways for musicians, video commentators, moviemakers, and iPhone app developers to get word out about what they’re doing. Anyone can post a video on YouTube or give away software on a web page. Payola is still out there, though. Wired magazine ran a story about it in the world of iPhone apps.
It works like this. You invent an iPhone app but can’t get anyone to notice. What do you do? One possibility is offer money to one of the well-known iPhone app review sites in exchange for a review of your creation. That gets the word out pretty well, so developers are starting to pay up. This modern payola scheme is enraging the iPhone community, however. Jason Snell, who works for Apple’s own app-review website complains, “Readers need to know that true editorial reviews are fair, and aren’t the product of any quid pro quo involving money or any other favors.”Brian X. Chen, “Fallout from Wired.com’s iPhone App Payola Story,” Wired, Gadget Lab, March 24, 2010, accessed May 19, 2011, http://www.wired.com/gadgetlab/2010/03/app-review-payola-reaction.
Michael Vallez, owner of the app-review site Crazy Mike’s Apps, disagrees. He charges for reviews without disclosing that to his readers, but he doesn’t guarantee a positive report. If he thinks the app isn’t worth buying, he sends the money back and cancels the review.
The Wired article concludes with an opinion from Kenneth Pybus, a professor of journalism and mass communication: “Undisclosed paid reviews are indisputably unethical because they manipulate the public. That’s an easy call to say it’s ethically wrong because that is a disservice to readers. It ought to be information that applies to readers and not information that advances yourself financially.”
Exercise \(1\)
1. Professor Pybus believes there’s a conflict of interest operating when Vallez accepts money to write reviews for his website Crazy Mike’s Apps. What, exactly, is the conflict?
2. Vallez says that his actions do not cause a conflict of interest, only the appearance of a conflict.
• What’s the difference between a conflict of interest and the appearance of a conflict of interest?
• How could Vallez argue that in his case there’s only an appearance, and, on close inspection, there really is no conflict here?
3. Three standard strategies for alleviating ethical concerns surrounding conflicts of interest are
• transparency,
• recusal,
• organizational codes.
How could each of these strategies be applied to the conflict-of-interest issue at Crazy Mike’s Apps?
4. You develop an iPhone app and you pay Vallez to review it. He tries the app, likes it, and writes up a positive paragraph.
• Make the case to defend the payment as an ethically acceptable gift. Are there limits to how much you could give before it would shift from a gift to a bribe? If there is a limit, how was the number chosen?
• Vallez says that if he doesn’t like an app he returns the money and refuses to review it. Does this fact interfere with the possibility of justifying the payments as a standard, business-type gift?
5. Old style payola—paying to get a rock band on the airwaves isn’t dead. According to a story from ABC News, the practice is alive and well; the only difference is that it’s no longer the deejays who get the cash, it’s high-level executives because they’re the ones who set today’s playlists. Here’s a comment from Foo Fighters drummer Taylor Hawkins: “I think back in the ’70s they used to pay people with hookers and cocaine, and now they’re just doing it with straight-up money. So they can all go out and buy their own hookers and cocaine.”Brian Ross, Richard Esposito, and Vic Walter, “Pay to Play: Music Industry’s Dirty Little Secret,” ABCNews.com, February 8, 2006, accessed May 19, 2011, http://abcnews.go.com/Primetime/story?id=1591155&page=1.
There’s a difference in the business world between providing entertainment and giving gifts. What is the distinction?
• Why might entertainment be considered less ethically objectionable than gifts?
• Leaving aside moral concerns about hookers and drugs, ethically, is there a difference between a rock group’s manager inviting radio executives out on a hooker and cocaine evening on one side and just sending them cash on the other? If there’s a difference, what is it? If not, why not?
The Decorator's Kickback
Source: Photo courtesy of Cara Fealy Choate, http://www.flickr.com/photos/carabou/139790339/.
On a message board, Ms. G. C. from Miami writes,
Here’s the problem: an interior decorator’s bid is broken down into two parts-(A) the decorator’s services and (B) the cost of labor and supplies. Most customers think (B) is a fixed cost-they forget it’s not the decorator’s fault if cabinetmakers charge an arm and a leg. So, where do customers look the closest when they’re comparing costs? That’s right, (A)-the decorator’s fee.
Well, decorators are creative people and for years they’ve been doing some very creative bidding. They’ve been lowballing (A) and padding (B), expecting the laborers to kick back a percentage of their inflated fees to the decorator. Surprised? Everyone’s doing it. Everyone, that is, except me. It’s deceptive. And as a Christian, I think it’s just plain wrong.
The customer’s final cost is about the same either way you cut it, so most decorators don’t feel they’re doing anything wrong. Are they right?
Needless to say, “blowing the whistle” on such a widespread and accepted practice would only damage my professional reputation. Ms. G. C. from Miami, “The Case of the Casual Kickback,” Urbana.org.
Exercise \(2\)
1. Mrs. G. C. confronts a third-party obligation. What is it?
2. Ethics can be weaponized—that is, used in your personal interest. Show how this could be the case here. Does the fact that she would benefit by getting these kickbacks eliminated somehow make her position less morally respectable? Why or why not?
3. Typically, according to Mrs. G. C, a client contracts an interior decorator. Later that decorator hires a laborer, and the laborer gives the designer a kickback. There’s a conflict of interest here, what is it? What is the ethical case against this kickback scheme?
4. Consequence theories of ethics represent the point of view that acts themselves are not good or bad; all that matters are the consequences. Therefore, lying isn’t bad if it happens that a fleeing criminal is asking you which way is the best escape route, and you point him down the street leading to the police station. Duty theorists, by contrast, believe that certain acts including lying and stealing are wrong regardless of the context and consequences.
• Do you suppose Mrs. G. C. adheres to a consequence ethics or a duty ethics? Why?
• Could you use the idea of consequence ethics to try to convince her to simply join the crowd and do what everyone else is doing? What would that case look like?
5. If you wanted to put an end to this pervasive kickback practice in the interior decorating world and only had time to present one argument, which of the following would you choose?
• The practice should be stopped because it involves unethical kickbacks.
• It should be stopped because it’s dishonest in the sense that consumers are misled.
• It should be stopped because the straight shooter is getting the shaft.
Why did you choose that argument and how could it be elaborated more fully?
6. Imagine that Mrs. G. C. from Miami reveals her name and makes a whistle-blowing cause out of her unhappiness with the standard practice in her profession.
• What kind of reprisals and negative effects might she expect?
• Do you believe whistle-blowing is justified in this situation? Why or why not?
• Is it required? Why or why not?
Sex, Money, and Whistle-Blowing
Source: Photo courtesy of j9sk9s, http://www.flickr.com/photos/j9sk9s/4128778346/.
Like all recent NBA All-Star players, Kevin Johnson made a lot of money during his pro basketball career. It drained out fairly quickly too. A few hundred-thousand went to the family of a sixteen-year-old high-school girl in Phoenix after a he-said, she-said sex accusation. A decade later, a similar story emerged, but at a different place: this time it was three girls in Sacramento, California, who attended St. Hope Academy. They took their stories—each told of a similar incident involving Johnson—to the recruitment advisor, Jacqueline Wong-Hernandez. Soon after, Ms. Wong-Hernandez was gone. Her resignation was a protest over the way the complaints were handled internally at the school, which was by dismissing them. Not only did St. Hope Academy take no action, the local police also decided not to press any charges in a case that essentially came down to one person’s word against another’s.
St. Hope Academy, as it happens, wasn’t a public school but a private business, and Kevin Johnson was the founder and CEO. A lot of the money flowing into the young institution came from the federal government as grants from the AmeriCorps program. After accusations surfaced that the grant money wasn’t spent appropriately, the school agreed to pay back \$423,836.50 to the government (about half of what the school had received). The first payment, about \$73,000, was made by Kevin Johnson himself.
So things probably would have ended, except for an AmeriCorps inspector general named Gerald Walpin. He believed Johnson had gotten way too good a deal: the school should have been forced to pay back much more of the grant money it had received. On May 5, 2009, he took the accusation to a California congressman who in turn brought public attention to the issue. On June 10, Mr. Walpin was fired. In an editorial statement, the Washington Times complained, “Mr. Walpin was fired with no explanation and no warning to Congress, even though the act governing inspectors general says IGs can be removed only after the president gives Congress 30 days’ notice and a reason for the firing. Rather than investigate the IG’s serious complaints, Mr. Obama fired him. In short, he snuffed out the whistleblower rather than heed the whistle.” “Editorial: Stonewalling on Walpin-gate,” The Washington Times, July 10, 2009, accessed May 19, 2011, http://www.washingtontimes.com/news/2009/jul/10/stonewalling-on-walpin-gate.
A local Sacramento TV station doing some follow-up uncovered a report detailing hush money payments at St. Hope and noted that the former NBA All-Star “often described himself as a personal friend” of another avid basketball player, President Obama. “Report: Johnson Offered to Pay Accuser,” KCRA.com, November 20, 2009, accessed May 19, 2011, www.kcra.com/news/21679385/detail.html.
Exercise \(3\)
1. How were the following two faced with a third-party obligation?
• Jacqueline Wong-Hernandez
• Gerald Walpin
2. In general, there are three possible responses to third-party obligations, do nothing, report the problem, become a whistle-blower. How would you categorize the response made by
• Wong-Hernandez?
• Walpin?
3. What questions can be asked to help determine whether whistle-blowing is justified? How might they be answered in the case of
• Wong-Hernandez?
• Walpin?
4. What questions can be asked to help determine whether whistle-blowing is ethically required? How might they be answered in the case of
• Wong-Hernandez?
• Walpin?
Loyal to the Badge
Source: Photo courtesy of Daniel Lobo, http://www.flickr.com/photos/daquellamanera/3250853982/.
When police officer April Leatherwood went undercover in Memphis, she changed her name to Summer Smith. She didn’t change her socks for a year—no showers or brushing her teeth either.
Her daily routine was to hang out on the street smoking and trying to befriend drug addicts. They’d take her to their dealers, where she’d make a buy and then try to find out who was the next person up the ladder. Her work resulted in about three hundred arrests, everyone from two-bit drug sellers to major movers who organized the street-level crime from luxury apartments.
Why’d she do it? According to the newspaper article relating her story, she loved the camaraderie of the department and its protect-and-serve mission.
When she emerged from the undercover program, she was promoted to detective. Unfortunately, her three-year romantic partner had moved on, and it was difficult to get the bad memories out of her mind. Still, when the reporter asked whether she’d do it again, she said, “Yeah.” Kristina Goetz, “A Year of Living Dangerously Takes a Toll on Undercover Memphis Officer,” Commercial Appeal, August 30, 2009, accessed May 19, 2011, www.commercialappeal.com/news/2009/aug/30/year-of-living-dangerously-takes-its-toll.
Exercise \(4\)
1. The two ideas on which company loyalty—or organizational loyalty to broaden the title—is built are the following:
• An attachment to the organization that is noninstrumental, meaning the attachment is not maintained only because it serves the employee’s concrete interests, such as the need for a salary.
• A deposited value in the organization that goes beyond any individual and their attachment: the organization’s value continues even without those who currently feel it.
How are these ideas manifested in the case of April Leatherwood?
2. Three measures on the scale of loyalty intensity are obedience loyalty, balanced loyalty, and free agency. Given what you’ve read about Leatherwood, where would you put her on this scale? Why?
3. Think about one of the career lines you’re considering, or the one you’re currently on, and imagine your company loyalty was similar to Leatherwood’s.
• What kinds of sacrifices do you imagine you’d make for the organization?
• Thinking about yourself, really, would you be able to make those sacrifices?
4. Leatherwood’s pay is not high, about \$50,000 a year. That works out to about \$7 an hour for the twelve undercover months. Obviously she enjoyed no status while she was undercover. Now, however, she has appeared in the newspaper and made detective grade in the department. In your opinion from what you’ve read, do you believe she has acquired a level of status through her work?
• If she has acquired a status, how would you describe it, what is it based on, how is it different from the status enjoyed by, say, a senator or a movie star?
• Does this status—assuming she’s acquired it—compensate what she suffered? Explain.
The Gawker Sex Tape
Source: Photo courtesy of Johan Larsson, http://www.flickr.com/photos/johanl/3619258199/.
All kinds of things happen in advertising agencies. Part of the reason is the diversity: a typical medium-to-large agency requires many different kinds of work, and that brings together a rainbow of people. There are suited, business types in the client services section. They work with budgets and bulleted lists and connect the agency with the corporate client. Down the hall the planners dress more casually and study demographics and culture. They invent market segments with names like soccer moms and then devise strategies for appealing to soccer moms’ distinct interests and tastes. Further down the hall, there are the agency’s actual commercial makers. They call themselves creative talent and are free to appear for work in jeans and ratty t-shirts. For their paycheck, they plan the short films the rest of us call TV commercials. The typical large agency also needs some HR people, accountants, computer techs, and lawyers.
Most advertising agencies have a pretty good mix of men and women, and in general, there are a lot of young people in the field because the long hours and short deadlines tend to lead workers to seek employment elsewhere eventually.
Most agencies are good places for romance. The chemicals are right: young workers, long hours, the excitement of million-dollar accounts, and lots of different types of people for different tastes. Those are also, as it happens, good ingredients for sex, as people at BBDO (an Omnicom agency) in New York City discovered when a grainy cell phone movie went viral. Shot by a guy in the creative department, he stuck his camera over the top of a cubicle and caught a nude couple wedged into the back corner.
As far as the scandal went, it didn’t take long for industry insiders to figure out who’d been caught, and from there, the information spread that they were both married to other people. The website Gawker.com followed the action closely, posting the original film and then running follow-ups. In a nutshell, this is what happened. The romantic couple continued at their jobs. No word about how their marriages are doing. The filmer got fired. He downloaded the footage onto his computer and then sent it around to a few friends. He had nothing to do—he says—with the fact that a few weeks later it was all over the web. In his words,
It ended up on Gawker and Mediabistro and then the word got back to me that all the creatives were sending it around. I freaked. I thought it was amazing how something could go viral and end up online so quickly when I had nothing to do with it really. Hamilton Nolan, “The Cameraman Speaks: He’s Fired but the Sex Tape Couple Keep Their Jobs,” Gawker, November 26, 2008, accessed May 19, 2011, http://gawker.com/5099143/the-cameraman-speaks-hes-fired-but-the-sex-tape-couple-keep-their-jobs.
Well, he was the one who filmed and originally distributed it.
The discussion posted on the Gawker web page is probably hotter than the sex that got everything going. Many issues come up, including: Why did the filmer get fired while the adulterers got to keep their jobs? One answer someone wrote in is that filming and distributing a sex tape is unethical (and possibly illegal if minors end up seeing it). A poster who calls himself BritSwedeGuy responds:
How could you be sacked for filming something you could see at work?
Would he have been sacked if he’d taken the video to HR?
Probably not.
So is he being sacked for withholding evidence then?
That only makes sense if the evidence was of a sackable offence.
Has he been sacked for passing the video on? Surely he’s a whistle-blower in that case and ought to be protected.
This is his argument. First, it doesn’t make sense to fire the filmer for recording the sex, since the act took place in public, and anyone (tall) could’ve seen it. The perpetrators couldn’t reasonably object to being filmed if they were exhibiting themselves so openly. Second, if the filmer had taken the film to HR to report the fact that sex was going on, he probably wouldn’t have been fired, and the entire episode would’ve been managed internally (and quietly) inside the agency. That means the only justifiable reason for firing the guy was that he digitalized the video and, in essence, made it possible for others to beam it across the Internet. If that’s what he did, though, then he’s a whistle-blower and should be protected.
Exercise \(5\)
1. If the filmer did take the video to the human resources department, what would he be reporting? What ethical misdeeds are happening?
• With respect to those misdeeds, where does the line get drawn between flirting for a second and stripping down for a fifteen-minute frolic?
2. On the question of whistle-blowing—and the possibility that the filmer’s action was ethically justifiable as a form of whistle-blowing—a poster named BadUncle isn’t buying it. He writes, “OK, I’ll be less glib. I don’t see how f***ing someone is a major ethical violation worthy of whistle-blowing (fnar)…it’s hardly damaging to a company, its clients, or its employees. Wake me when their monotonous thrusting implants the seed of fraud into an earnings statement.”
BadUncle doesn’t think the filmer could defend himself by claiming to be a whistle-blower. In your own words, why not? Do you agree? Explain.
3. Do you believe the filmer sensed a company loyalty? Would a stronger sense of company loyalty have encouraged him to erase the tape instead of disseminating it? Why or why not?
4. Advertising agencies are notorious for fast money and little loyalty to their employees. Many agencies, if they lose an account, straight off fire many of those who worked on the account even if the loss had nothing to do with the employee’s work performance (the client may have discontinued a line of products, for example, and for that reason discontinued the advertising). Given that business attitude, does the company have a right to demand that employees think of the agency’s interests when doing things like filming? Why or why not?
5. Work in advertising—especially in the creative department where people often have to actually make ads for air right now—is very stressful. There’s a lot of money involved and a lot of competition among creatives. Do you believe sex at work is an ethically defensible way of alleviating the stress comparable with taking a cigarette break or just a quick walk around the block? How could the argument be made in favor?
6. If someone told you they wanted to work in advertising because it’s a good spot to meet someone and get married (which is probably true at most agencies), do you believe that’s a reasonable decision, one in harmony with the ethical responsibility to pursue one’s happiness and welfare? Why or why not?
7. If someone told you they were going to work in advertising because they’d heard it’s a good place for fast, cheap sex (which it probably is at most agencies), do you believe that’s a reasonable decision, one in harmony with the ethical responsibility to pursue one’s happiness and welfare? Why or why not? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/07%3A_Employee's_Ethics-_Making_the_Best_of_the_Job_You_Have_as_You_Get_from_9_to_5/7.05%3A_Case_Studies.txt |
Chapter 8 examines some ethical decisions facing managers. It considers the values that underlie and guide the hiring, promoting, and firing of workers.
08: Manager's Ethics- Getting Promoting and Firing Workers
Learning Objectives
1. Locate ethical tensions affecting the breadth of a hiring search.
2. Define applicant screening and mark its ethical boundaries.
3. Define applicant testing and consider what makes an appropriate test.
4. Draw the lines of an ethical interview process.
Help Wanted, but from Whom?
The Central Intelligence Agency’s hiring practices are widely known and well depicted in the movie The Recruit. After discretely scouting the special capabilities of a young bartender played by Colin Ferrell, Al Pacino catches him at work, orders a drink, carries on a one-sided and cryptic conversation, performs a magic trick with a ripped newspaper, announces that “things are never quite as they appear,” and finally admits that he’s actually a job recruiter.
Ferrell seems annoyed by the man’s presence.
Pacino returns to the newspaper, pulls out a page covered by an ad announcing “Two Day Specials.” He circles the letters c, i, and a in “Specials” and walks out. Colin Ferrell follows. R. Donaldson (director), The Recruit (Burbank, CA: Touchstone Pictures, 2003), film.
Actually, that’s not true. The CIA doesn’t hire that way. They advertise on CareerBuilder just like any other company. You can understand, though, why they wouldn’t mind scouting out their applicants even before allowing people to apply; they don’t want to end up hiring double agents.
Something like that happened soon after Procter & Gamble grew jealous of a competitor’s hair-care products. Salon Selectives, Finesse, and Thermasilk were all doing so well for Unilever that P&G contracted people to get hired over at Unilever and bring back secrets of their success. The corporate espionage—which P&G executives characterized as a “rogue operation”—led to a multimillion-dollar settlement between the companies and left behind the lesson that when you’re the boss and you’re hiring, you’ve got to make sure that the people you bring in will be loyal to the company. “Fortune: P&G Admits Spying on Hair Competitors,” Business Courier, August 30, 2001, accessed May 24, 2011, http://cincinnati.bizjournals.com/cincinnati/stories/2001/08/27/daily43.html.
The problem is you’ve also got to make sure that they’re going to do good work, the best work possible.
Between the two requirements there’s a tension stretching through every decision to hire a new worker. On one side, you want to limit the people you even consider to those few who, for one reason or another, you know won’t be a total disaster. On the other side, no company can survive playing it safe all the time; generally, the corporations able to hire the best talent will win over the long run. And one way to get the best talent is to cast as large a net as possible, let a maximum number know that a position is available, and work through the applications carefully no matter how many pour in.
Conclusion. Hiring employees can be safe or risky depending on how broadly you announce a job opening.
Three Strategies for Announcing a Job Opening: Nepotism, Internal Public Announcement, Mass Public Announcement
Start on the safe side of hiring. Nepotism is granting favored status to family members. In the case of hiring, it means circulating information about open jobs only to your relatives. Naturally this happens at many small businesses. A sales representative at a small firm importing auto accessories meets a woman at work. She’s also a rep. Marriage follows. A year later he decides to quit his job and strike out on his own with a new website project that reviews and sells the same kind of car products. Things go well, page hits climb, sales increase, and soon he needs help so he hires…his wife. They’ve worked together before, and they both know the field. Most important, the risk is minimal. Since he’s waking up with her in the morning he can figure she’s not going to skip out on work just because it’s a nice spring day. And is she going to steal office supplies? A little money from the payroll? An important client? Probably not. This is a case where nepotism makes sense.
But what about the other way? What if the husband’s solo venture flops, and at the same time, his wife’s career flourishes. Now he needs a job, and she’s got the power to hire. A job opens up. Probably, she’s got junior staff ready for the post, but can she push them aside and bring her husband in?
There is some justification: she’s worked with him before, and she knows he performs well. Plus, as a boss of his own (failed) business, he’s obviously got leadership experience and he has demonstrated initiative. All that counts for something. But if she goes with him she’s going to breed resentment in her group. You can hear it:
“Hey, what do you need to get a promotion around here?”
“A last name.”
And
Now you might be asking why nepotism bugs me so much. It’s the presumption. It’s the attitude. It’s just one more example of how life isn’t fair. Am I jealous? I don’t know. I guess I take advantage of the company in other ways…LOL. What can I learn from this? That life is good if you’re born into the right family? That I need to control my attitude and stop letting petty crap drive me to drink? Marti’s Musings, “Nepotism Sucks,” August 30, 2004, accessed May 24, 2011, businessethicsworkshop.com/Chapter_8/Nepotism_sucks.html.
That last paragraph comes from a blog entry titled “Nepotism Sucks.” It does for his company too: few firms can be successful with employees musing about how they “take advantage of the company” while they’re punctuating comments about their work with LOL. As for the central issue, he’s right. Basic fairness isn’t being honored: people are getting considered for a job because of who they’re related to, and it’s not this blogger’s fault that his last name is wrong.
On the other hand, “Is Nepotism So Bad?” titles an article on Forbes.com that compiles a list of large companies—including Forbes—where nepotism has been the norm…and successful. According to the article, experts estimate that executive-level nepotism works out about 40 percent of the time. What are the advantages to bringing in your own? Familiarity with the business and trust are noted. Another advantage is also underlined: frequently, relatives don’t want to let their own relatives down. Sons work harder for fathers, cousins for cousins, brothers for sisters. There’s a productivity advantage in nepotism. Arguably, that factor weighs more heavily than the bitterness arising when deserving workers already employed don’t get a chance to apply for a job because it already went to the boss’s sister-in-law. Klaus Kneale, “Is Nepotism So Bad?,” Forbes, June 20, 2009, accessed May 24, 2011, http://www.forbes.com/2009/06/19/ceo-executive-hiring-ceonewtork-leadership-nepotism.html.
Finally, at least theoretically, there’s a creative solution to the bitterness caused by nepotism: make virtually every post a nepotism-first position. Oil-Dri, a producer of absorbent materials, celebrated its fiftieth anniversary with a party for all employees. “Would everyone,” the group was asked at one point, “who is related to someone else in the company please stand up?” Of the seven hundred employees, about five hundred left their seats.
Internal public job announcements occupy a middle spot on the continuum between playing it safe (only letting selected people you’re certain will be loyal and at least moderately capable know when a job is available) and going for the best talent (broadcasting the post as broadly as possible and accepting applications from anyone).
An example of an internal public job announcement comes from the National Review, a political magazine and website run by the kind of people who wear suits and ties to baseball games. Their blog is called The Corner, and the magazine’s editors fill it with thoughts and arguments about the day’s political debates in Washington, DC. There’s also a bit of insider humor, provocation, and satire tossed back and forth between posters. If you keep reading for a few weeks, you’ll start to sense an intellectual soap opera developing along with the libertarian-conservative politics; there’s an undercurrent of shifting alliances, snarkiness, and thoughtful jabs.
You’ll also notice that National Review places job announcements on The Corner blog. There aren’t a lot of openings, but every couple of weeks a little announcement appears between posts.
The National Review Online is seeking an editor with web capabilities. Send applications to [email protected].
It’s pretty ingenious. The only people who are going to be reading The Corner are
• sincerely interested in the wonkish subjects these guys publish about;
• not out there just looking for any job (at the time they see the announcement, they’re not looking for a job at all because it’s not a job site);
• compatible on a personal level with the National Review crew. The posters let personalities shine through, and if you don’t have chemistry with their style of humor and talk, you’re simply not going to be reading them.
What an internal public job announcement seeks to do is get the most applications in the hopper as possible, and so the announcement is published on a free Internet page that anyone can see. That’s the public part. But because the page is only commonly followed by people who are already inside the world of public policy defining the employees at National Review, the bosses don’t need to worry about the wrong kind of people sending in résumés. That’s the “internal” part. Recruiters can get a lot of applicants—increasing their chances of finding really talented people—without worrying too much about a bunch of lefties who really prefer websites like Daily Kos trying to fake their way into the organization.
Mass public job announcements are just what they sound like. You need someone and you post the position at Monster, CareerBuilder, TheLadders. Here you’re giving up confidence that applicants will fit into the organization naturally, and you’re even risking corporate spying moles like those that infested Unilever. In exchange, however, you’re getting the broadest selection possible of people to toss their hat into the ring, which maximizes your chances of finding stellar work performance.
Beyond the advantage of many applicants, there are good ethical arguments for mass public job announcements. The simplest is fair play: everyone should get an equal opportunity to take a run at any job. Just past that, there are concerns about discrimination that are eased by mass announcements. While there’s no reason to launch charges of inherent racism at nepotistic hiring practices, it might well be true that if a small business is initiated by an Asian family, and they start hiring relatives, the result at the end of the day is a racial imbalance in the company. Again, no one is equating nepotism with racism, but the appearance can develop fairly easily whenever job announcements are not publicized as widely as possible. The parallel case can be made with respect to internal public job announcements. If 90 percent of the people who come in contact with the “help wanted” message happen to be women, sooner or later, there’s going to be some guy out there who complains. So, one argument in favor of mass announcements is the stand it helps take against illegal and unethical discrimination.
Another argument for mass announcements is reciprocity. If a company is trying to sell a product to the general public, to anyone who’s willing to pay money for it, then shouldn’t they allow everyone a shot at becoming an employee? It doesn’t seem quite right to profit from anyone—to try to sell, say, a car to anyone who walks in the door—and then turn around and not give all those consumers a decent chance at earning a living there at the dealership.
Conclusion. Announcing a job opening is not automatic. You can announce the spot more publicly or less so. There are advantages and disadvantages to the various approaches, but there’s always an ethical responsibility to clearly account for the reasons why one approach is selected over another.
Ethical Perils of Job Announcements
Ethical perils of job announcements include
1. describing a position in ways that don’t correspond with the reality,
2. announcing a post to people who really have no chance for the job.
Once you’ve identified the demographic pool you’d like to recruit from, it’s easy to oversell the job in the announcement you post. The most blatant cases—You can earn \$300 per hour working from home!—are obvious frauds, but even sincere attempts can cause misunderstandings. Say a job requires “occasional travel.” Fine, but does that mean occasionally during the year or occasionally during the month?
The much more severe case of insincerity in job announcements is posting one before an audience that has no reasonable chance of getting the job. When Hooters posts a “server wanted” sign, we all know what they’re looking for just like when the rough bar next door advertises for a bouncer. But what if it’s a formal restaurant advertising for a waiter? If the place is across town, you can’t just drop in to check out the kind of people they hire. So maybe you go through the application process and make the telephone calls and finally go in for the interview. As you walk through the door, the first thing they check out is your weight profile. Then your jawline, haircut, eyes, and the rest. They want to see how you compare with the other waiters who all look like they model on the side.
If you’re lucky, you see yourself fitting right in, but if you’re like most of us, you know the interview’s over before it started; the whole thing has been a huge waste of time.
Now put yourself on the other side. As the restaurant manager trying to fill the position, you know you should put the requirement that applicants be devastatingly handsome into the ad. The duty to be honest requires it. The duty to treat others as an end and not a means requires it. The idea that our acts should be guided by the imperative to bring the greatest good to the greatest number requires it. Almost every mainstream ethical theory recommends that you tell the truth about what you’re looking for when you announce a job. That way you don’t waste peoples’ time, and you spare them the humiliation of being treated as irrelevant. So you should want to put in the ad something about how only potential movie stars need apply.
But the law virtually requires that you don’t put the line in. If you explicitly say you’ll only consider exceptionally attractive men for your job, you open yourself to a slew of lawsuits for unfair and discriminatory hiring practices. In fact, even Hooters isn’t safe. In 2009 the chain was sued by a Texas man named Nikolai Grushevski because they refused to hire servers who looked, well, like him. When it gets to that point—when hairy guys can get away with calling lawyers because they aren’t hired to serve food in short shorts and halter tops—you can understand why restaurants don’t want to publicly admit exactly what they’re looking for. “Texas Man Settles Discrimination Lawsuit Against Hooters for Not Hiring Male Waiters,” Fox News, April 21, 2009, accessed May 24, 2011, www.foxnews.com/story/0,2933,517334,00.html.
Bottom line: if Hooters just comes out and states what it is that makes their kind of employee, they can get sued. So they’re much better off just making the announcement ambiguous. That way, when it turns out that no hairy guys ever seem to get hired, they can always say it’s because they didn’t seem so adept at dodging tables while shooting around with trays of beers and sandwiches. Or whatever. One lie is as good as another so long as it keeps the restaurant out of the courtroom.
For managers, this is a tight spot. They’re caught between what’s right and the law. In ethical terms, they’re stretched between two conflicting duties: to tell the truth and to get the famous Hooters Girls into the restaurant.
Screening
Reducing a large pool of applicants to a manageable selection of people for serious consideration is applicant screening, sometimes referred to as filtering. Screening begins with the job announcement. Requirements like “three or more years of experience” and “willingness to work the night shift” go a long way toward eliminating applicants.
It’s impossible, though, to completely define the perfect applicant beforehand, and even if you could, there’s almost always going to be someone like Nikolai Grushevski who shows up. So screening continues as the preliminary review of applications and applicants to see who can be quickly crossed off the list without any serious consideration.
Legally, who can be crossed out? The default response is no one. In its broadest form, civil rights employment law guarantees equal opportunity. All applicants deserve to be considered and evaluated solely on their ability to do the job, and the federal government’s Equal Employment Opportunity Commission is stocked with lawyers who are out there doing their best to make sure the rules are upheld. For managers, that means they’ve got to take all applicants seriously; they’ve got to pursue interview questions about ability, training, experience, and similar. Now, this is where a guy like Grushevski can come in the door and say, “Look, I can deliver a round of burgers and beer as well as any woman.” He’s probably right. Still, he’s not the right person for the job; there’s no reason for a manager to lose valuable time dealing with him.
Similarly, a wheelchair-bound man shouldn’t be a beach lifeguard; an eighty-year-old shouldn’t be flying commercial jetliners; the seven foot one and 330-pound Shaquille O’Neil isn’t going to be a horse jockey. There is a legal way for companies to summarily screen out inappropriate applicants: by appealing to bona fide occupational qualifications (BFOQs). BFOQs are exceptions granted to equal opportunity requirements. A form of legalized discrimination, they let managers cross off job applicants for reasons that are normally considered unfair: gender, physical size, religious belief, and similar. (As a note, race isn’t allowed to be considered a BFOQ.)
When do bosses get this easy way out? When they can show that the otherwise discriminatory practices are required because of a business’ nature. So while it’s clear that Shaquille O’Neil’s intimidating size doesn’t mean he’ll be a bad accountant, the nature and rules of horse racing require that riders be diminutive, and that means Shaq would be a disaster. A horse owner can show that the job requires a physically little person to be successful. Thus size becomes a BFOQ and a legitimate way of screening applicants for that particular job.
A maker of men’s clothes can reasonably screen out women from the applicant pool for models—but they can’t eliminate female applicants from consideration for a sales position. Or they could, but only if they could show that maintaining a masculine public image was integral to the success of the company. For example, you could imagine a company called Manly Incorporated, which sold products based on the premise that every employee was a quality control officer.
Along similar lines, a Catholic school may screen atheists from the search for a teacher, but it’s harder to justify that filter for janitors. At the airport security line women can be assigned to pat down women and men to men, but either may apply for the job to hand check the carry-on bags.
Another common screen is education. Imagine you have just opened a local franchise of Jan-Pro, which offers commercial cleaning services to car dealerships, gyms, banks, churches, and schools. “2011 Fastest-Growing Franchise,” Entrepreneur, accessed May 24, 2011, http://www.entrepreneur.com/franchises/fastestgrowing/index.html. What level of education will you be looking for in potential employees? Since the job involves mixing chemicals, it seems like requiring some basic education is a fair demand, but is a college degree necessary for the work? You may have one as a manager, but that doesn’t mean you should necessarily demand that much from employees. And on the other side, is it fair to screen out someone who’s got too much education, say a master’s degree in chemistry? It does seems reasonable to suspect that this kind of person will soon become bored pushing a vacuum over carpets.
Then again, do you know that will happen? Is it fair to screen based on what you suspect might occur?
Another type of screening catches high-risk lifestyles. Smoking is one of the most often cited, and the Humana company in Ohio is one of a growing number that’s directly banning smoking—on or off work—by new employees. Megan Wasmund, “Humana Enforces Mandatory Stop Smoking Program,” wcpo.com, June 16, 2009, accessed June 7, 2011, www2.wcpo.com/dpp/news/local_news/Humana-Enforces-Mandatory-Stop-Smoking-Program.
These healthy lifestyle policies set off firestorms of ethical debates. With respect to smoking and in broad strokes, the company has an interest in prohibiting smoking because that should mean healthier workers, fewer sick days, lower health insurance premiums, and higher productivity. In short: better working workers. On the other side, job applicants (at least the smokers) don’t believe that they’re less productive than everyone else, and anyway, they resent being excluded for a recreational habit pursued on their own time. In long discussion boards—there are hundreds online—the debate plays out. Here’s one exchange from a typical board:
bonos_rama: I wouldn’t hire anyone that has a habit of leaving their desk every hour to stand outside for 10 minutes. Doesn’t matter if it’s to smoke, drink coke, or pass gas that they’re leaving, it’s bad for productivity.
Mother of a Dr.: But it’s OK to stand by the coffee pot and discuss sports and politics? Productivity actually improves when you get away from the computer every hour.
matt12341: Even discounting the productivity argument, smokers tend to have more long-term health problems, leading to higher insurance premiums so companies end up paying more.
jamiewb: What if we apply this logic to people who are overweight? What about people who have a family history of cancer? Or a higher incidence of diabetes? As long as it doesn’t impact job performance, I don't think it’s fair to refuse to hire smokers.
happily-retired: I think it is a great idea to not hire smokers. Up next should be obesity, as it leads to diabetes, heart problems, joint problems, etc. Companies following that path would be demonstrating good corporate citizenship by fostering a healthier America.
Zom Zom: Yes, the good citizenship of fascism. Now my employer has the right to dictate what I do with my body? “Land of the free,” unless your boss doesn’t like the choices you make. “Humana: We Won’t Hire Smokers,” Newsvine.com, June 16, 2009, http://sorrelen.newsvine.com/_news/2009/06/16/2935298-humana-we-wont-hire-smokers.
You can see that underneath the back-and-forth, this is ultimately a debate about ethical perspectives. One side tends toward a utilitarian position: the greater good in terms of health and related issues justifies the filtering of smokers in hiring decisions. The other side tends toward a fundamental rights position: what I do with my time and body is my decision only. Both sides have strong arguments.
Criminal record screening is another common filter for job applicants. Most states won’t allow employers to deny someone fair consideration for a job only because of a prior criminal conviction. There’s wiggle room, though. In New York, Article 23-A of the correction law certifies that employment may be denied if
• there’s a direct relationship between the criminal offense committed and the employment sought,
• the applicant would pose an unreasonable risk to property or the safety or welfare of others.
Those are big loopholes. The first one means the Brinks armored car company can legally refuse to consider ex-bank robbers for a position. It may also apply to the shoplifter who wants to be a cashier or the drug dealer who wants a job in the pharmacy.
The second exception is still broader and applied in Grafter v. New York City Civil Service Commission.Grafter v. New York City Civil Service Commission, 1992. In that case, the Fire Department of New York refused to hire Grafter because he’d been caught drunk driving on his last job. A potentially drunken fireman does seem like a risk to the welfare of others. Pushing that further out, the same would probably go if he applied to be a taxi driver. In fact, the list of jobs that may seem dangerous for others if the worker is drunk extends a long way, probably everything in construction, transportation, or anything with heavy equipment. So the law does allow employers to resist hiring convicts across a significant range of wrongdoing.
Finally, the basic ethical tension pulls in three competing directions for any manager facing a criminal hiring decision:
1. The ethical responsibility to recovering criminals. Rehabilitation (via honest work) is good for ex-convicts.
2. The manager’s responsibility to the company. Managers need to avoid problems whenever possible and keep the machine running smoothly so profits flow smoothly too.
3. The company’s responsibility to the general public. If a taxi syndicate is hiring ex-drunk drivers, you’ve got to figure something’s going to go wrong sooner or later, and when it does, the person who put the driver behind the wheel will be partially responsible.
Social media is another potential filter. Fifty-six percent of millennials believe that the words and pictures they put on Facebook and Twitter shouldn’t be allowed to factor into hiring decisions. Wei Du, “Job Candidates Getting Tripped Up By Facebook,” MSNBC.com, August 14, 2007, accessed May 24, 2011, http://www.msnbc.msn.com/id/20202935/page/2. Recruitment officers, they’re saying, shouldn’t be going through online photo albums to check out the kinds of things you and your buddies do on Friday nights.
From the employers’ side, however, the argument in favor of checking the pages is simple. If an applicant is sufficiently incautious to leave pictures of massive beer funnel inhalations available for just anyone to see—and if they do that while they’re trying to put their best face forward as job seekers—then God knows what kind of stuff will be circulating once they’ve got a job. As a manager, it’s part of your job to protect the company’s public image, which means you’ve got to account for clients and others maybe running the same Google and Facebook searches that you are.
It’s an easy scenario to imagine: you hire someone with a flamboyant online life. Soon after, a client working with her gets nosey, does a Google image search, and what comes in at the top of the list is a picture of your new employee slamming beers, chain-smoking cigarettes, or maybe inhaling something that’s not legal. This isn’t good and the person who looks really bad is the supposedly mature manager who allowed the whole thing to happen by hiring her.
Of course there’s always the standard but still powerful argument that what employees do after hours is their own business, but one of the realities inherent in the Internet is that there is no such thing as “after hours” anymore. Once something goes online, it’s there all the time, forever. Managers need to take account of that reality, which might mean rethinking old rules about privacy.
Testing
Once an ad has been placed, and applicants have been pooled, and the pool has been screened, the real hard work of hiring begins: choosing from among apparently qualified people. One tool used in the selection process is applicant testing. There are various sorts of tests, but no matter the kind, for it to be legitimate, it should itself pass three tests. It ought to be
• Valid. The test must measure abilities connected to the specific job being filled. A prospective roadie for Metallica shouldn’t be asked to demonstrate mastery of Microsoft Excel, just as there’s no reason to ask an accountant to wire up his cubicle with speakers blasting 115 decibels.
• Normalized. The test must be fair in the sense that results are adjusted for the circumstances of the testing session. If you’re checking to see how frequently applicants for the post of TV weatherman have predicted sunshine and it turned out to rain, and one woman gets tested in Phoenix while another takes Seattle, it’s pretty easy to see who’s going to win in terms of raw numbers. Those numbers need to be adjusted for the divergent levels of difficulty.
• Constant. The results any test taker achieves over time should be similar. Just like a broken clock is right twice a day, an applicant for an interior design job who happens to be color-blind might once in a while throw together a carpet-sofa combination that doesn’t clash. A good test eliminates the lucky hits, and also the unlucky ones.
Of the many kinds of hiring tests now in use, the most direct try to measure the exact skills of the job. Skill tests can be simple. They’re also relatively easy to control for validity, normalization, and constancy. For example, applicants for a junior-level position in copyediting at a public relations firm may be given a poorly written paragraph about a fictional executive and asked to fix up the spelling and grammar.
Psychological and personality tests are murkier; it’s more difficult to show a direct link between the results and job performance. On one side, you’ve got a test that probes your inspirations and fears, your tastes and personal demons. On the other side, the test’s goal is to reveal how well you can handle plain work assignments. Here’s an example of the disconnect. The following is a true-or-false question that Rent-A-Center placed on one of its employee application tests: I have no difficulty starting or holding my bowel movement.Martin Carrigan, “Pre-Employment Testing—Prediction of Employee Success and Legal Issues,” Journal of Business & Economics Research 5, no. 8 (August 2007): 35–44.
Well, it’s hard to see the link between bathroom performance and the ability to rent washer and drier sets. Rent-A-Center wouldn’t be asking, though, if they didn’t think the link was there. And they could be right; there may be some connection. One of the firmest sources of belief in the link between personality profile and job performance is the very interesting Minnesota Multiphasic Personality Inventory (MMPI). That specific test is the origin of the bathroom question. Other true-or-false choices on the long test include the following:
• I am very attracted to members of my own sex.
• Evil spirits possess me sometimes.
Now, the MMPI is a real test with a long and noble history. One of the things it tries to do is establish correspondences. That is, if we take a group of successful executives at Rent-A-Center and we discover that they nearly universally have trouble in the bathroom, then it may make sense to look for people who suffer this discomfort when looking to recruit future company leaders. As for the why question—as in why is there a link between bathroom habits and success?—that doesn’t matter for a correspondence test; all that matters is that some link is there. And if it is, then you know where to look when you’re hiring.
Theoretically, correspondence testing makes sense. Still, it’s hard to know how applicants are going to react to questions about sexual attraction and evil spirits. Obviously, some are going to find the whole thing too weird and not turn in responses that actually match their profile. As for applicants and employees of Rent-A-Center, they filed a lawsuit.Karraker v. Rent-A-Center, 2005.
Inescapably, correspondence-type personality tests are vulnerable to lawsuits because they’re explicitly based on the premise that no one knows why the results indicate who is more and less suitable for a post. The administrators only know—or at least they think they know—that the correspondence is there. It’s not obvious, however, like it is with a simple skill test, so it makes sense to imagine that some are going to doubt that the test is valid; they’re going to doubt that it really shows who’s more and less qualified for a job.
So the problems with psychological tests include validity failure and lawsuits. Problems with constancy and normalization could also be developed. Added to that, there are invasion of privacy questions that are going to get raised whenever you start asking perspective employees about their bathroom habits and bedroom wishes.
On the other hand, it needs to keep being emphasized that the tests do happen, and that’s not a coincidence. At the Universal Studios Hollywood theme park, recruiter Nathan Giles reports that the tests he administers—with true-or-false questions including “It’s maddening when the court lets guilty criminals go free”—actually do produce valuable results. They correlate highly, he says, with personal interviews: if you do well on the test, you’re going to do well face to face. And though the application and interpretation of these tests are expensive, in the long run they’re cheaper than interviewing everyone. Finally, if that’s true, then don’t managers have a responsibility to use the tests no matter how heated the protests? Ariana Eunjung Cha, “Employers Relying on Personality Tests to Screen Applicants,” Washington Post, March 27, 2005, accessed May 24, 2011, www.washingtonpost.com/wp-dyn/articles/A4010-2005Mar26.html.
Lie detectors in the Hollywood sense of wires hooked up to the fingers for yes-or-no interrogations are illegal except in highly sensitive and limited cases, usually having to do with money (bank guards) and drugs (pharmaceutical distribution). Written honesty tests are legal. Generally, the questions populating these exams resemble those found on psychological tests, and deciphering the results again works through correlation. Obviously, the test can’t work directly since both honest and dishonest people will answer “yes” to the question “are you honest?” Here are some typical questions that do get asked:
• I could help friends steal from my company.
• I’m not an honest person and might steal.
• I return quarters I find on the street to the police station.
Medical tests are generally only considered appropriate when the specific job is labor intensive. As always, there’s a difference between testing and prying, and it’s your responsibility as a manager to limit the questioning to specifically work-related information. Questions about past physical problems are generally considered off limits as are future problems that may be indicated by family health history. A simple example of an appropriate medical test would be a vision examination for a truck driver.
When Michael Phelps—the thick-grinned Olympic swimming hero—got photographed pulling on a bong, he immediately failed the drug test with one of his employers: Kellogg’s breakfast cereal. He wouldn’t be hired again, the company explained, because smoking pot “is not consistent” with the company’s image.
The National Organization for Reform of Marijuana Laws rushed to disagree, insisting that the problem’s not that the drugs are bad; it’s the law that’s outdated and wrongheaded. They were supported, NORML claims, by the Washington Post and Wall Street Journal. Paul Armentano, “The Kellogg Company Drops Michael Phelps, The Cannabis Community Drops Kellogg’s,” NORML (blog), February 6, 2009, accessed May 24, 2011, http://blog.norml.org/2009/02/06/the-kellogg-company-drops-michael-phelps-the-cannabis-community-drops-kelloggs.
However that might be, it’s seems difficult to object to Kellogg’s argument. The reason they’d hire Michael Phelps in the first place is to brand their product with the image of beaming, young health, not zoning out in front of the TV eating Doritos. Whether it’s legal or not, pot smoking is going to clash with the job description.
But what if he hadn’t been caught by someone with a camera? Would Kellogg’s have the right to demand a drug test before signing Phelps up as a representative? It depends where you are. Because there’s no broad federal law on the subject, the rules change depending on your state, even your city. If you’re looking for a job and you share a pastime with Michael Phelps, you may be in trouble in Alaska where any employer can test any applicant at any moment. In Arizona, on the other hand, you have to get written warning beforehand, which might allow for some cleanup. And if you’re applying for a government job in Berkeley, California, you can party on because a local ordinance prohibits testing. American Civil Liberties Union, “Testing Chart,” aclu.org, accessed May 24, 2011, http://www.aclu.org/FilesPDFs/testing_chart.pdf.
Looking at the Berkeley law allows a sense of the central ethical conflict. On one side, the employers’, the obvious and strong argument is that drug use negatively affects work performance, so evaluating job prospects in terms of their future productivity implies, it almost requires, making sure they’re not distracted or disoriented by drug habits. In contrast, the Berkeley ordinance persuasively states that mandatory drug testing fails two distinct tests:
1. It assumes guilt instead of innocence.
2. It invades the individual’s privacy.
Deciding about drug tests seems to come down to deciding whose legitimate rights deserve higher billing: the employer’s or the employee’s.
In 1971 the US Supreme Court banned intelligence quotient (IQ) testing except in very limited circumstances after finding that the tests disparately affected racial minorities. Further, serious IQ tests (as opposed to seven-question Internet quizzes) are extremely expensive to apply, so even if it were legal, few employers would use the test with any frequency.
Conclusion. Tests applied by employers to job applicants include those probing skills, psychological profile, honesty, medical condition, and drug use.
Interviewing
In 1998 the Indianapolis Colts had a very good problem. Holders of the top pick in the National Football League draft, they had to choose between two exceptional players: two that everyone agreed radiated Super Bowl talent. Both were quarterbacks. Peyton Manning had a better sense of the field and smoother control of the ball; Ryan Leaf had a larger frame and more arm strength. Which would make the better employee? The call was so close that the team with the second choice, the San Diego Chargers, didn’t care much who the Colts selected; they’d be happy with either one.
The Colts didn’t have the luxury of letting the choice be made for them, and as draft day approached they studied film of the players’ college games, poured over statistics, measured their size, speed, and how sharply and accurately they threw the ball. Everything. But they couldn’t make a decision.
So they decided to interview both candidates. The key question came from Colts coach Jim Mora. He asked the young men, “What’s the first thing you’ll do if drafted by the Colts?” Leaf said he’d cash his signing bonus and hit Vegas with a bunch of buddies. Manning responded that he’d meet with the rest of the Colts’ offense and start going over the playbook. Mora saw in Manning a mature football player ready for the challenges of the sport at its highest level. In Leaf he saw an unpredictable kid.
More than a decade later, Peyton Manning heads into another season as starting quarterback. Having won the Super Bowl, set countless team and NFL passing records, and assured himself a spot in the NFL Hall of Fame, you can understand that the Colts are happy with their selection.
Ryan Leaf has recently been indicted on burglary and drug charges in Texas. He got the news while in Canada at a rehab clinic. As for football, after a rocky first few seasons, his performance collapsed entirely. He hasn’t been on a field in years.
Interviews matter. Grades, recommendation letters, past successes, and failures on the job—all those numbers and facts carry weight. But for most hiring decisions, nothing replaces the sense you get of a candidate face to face; it’s the most human part of the process.
Because it’s so human, it’s also one of the most ethically treacherous. Two factors usually weigh heavily in deciding which questions should and shouldn’t be asked:
1. Fairness
2. Pertinence
Fair questioning means asking similar questions to all applicants for a post. If the position is entry level, many candidates will be young, inexperienced, and probably easily flustered. That’s normal. So too there’s nothing necessarily wrong with trying to knock applicants off rhythm with a surprise or trick question. The problem comes when one candidate gets pressed while another gets softballs.
What do tough questions look like? One answer comes from Google. There are always blog entries circulating the Internet from applicants talking about the latest weird questions asked by that successful and unpredictable company:
• How many golf balls can fit in a school bus?
• You are shrunk to the height of a nickel and your mass is proportionally reduced so as to maintain your original density. You are then thrown into an empty glass blender. The blades will start moving in 60 seconds. What do you do?
• How much should you charge to wash all the windows in Seattle?
• Every man in a village of 100 married couples has cheated on his wife. Every wife in the village instantly knows when a man other than her husband has cheated, but does not know when her own husband has. The village has a law that does not allow for adultery. Any wife who can prove that her husband is unfaithful must kill him that very day. The women of the village would never disobey this law. One day, the queen of the village visits and announces that at least one husband has been unfaithful. What happens?
• Explain a database in three sentences to your eight-year-old nephew. Michael Kaplan, “Want a Job at Google? Try These Brainteasers First,” CNNMoney.com, August 30, 2007, http://money.cnn.com/2007/08/29/technology/brain_teasers.biz2/index.htm.
We’re a long way from “why do you want to work at Google?” and even further from “what was your biggest accomplishment or failure in your last job?” Those are softballs; anyone going into Google for an interview is going to have prepared answers to those. It’s like reading from a script. But looking at the hard questions Google actually poses, there is no script, and you can see how things could go south quickly. You can’t figure out about golf balls and school buses, and you start to get nervous. Next, the blender question seems odd and threatening, and it’s all downhill from there. Some interviews just don’t go well and that’s it. As an applicant, you probably don’t have too much to complain about as long as the next guy gets the same treatment. But if the next guy gets the softballs, the fairness test is getting failed. As a manager, you can go hard or soft, but you can’t change up.
On the question of pertinent interview questions, the Google queries seem, on the face, to be troublesome. Is there any job that requires employees to escape from a blender? No. But there are many jobs that require employees to solve unfamiliar problems calmly, reasonably, and creatively. On that ground, the Google questions seem perfectly justifiable as long as it’s assumed that the posts being filled require those skills. By confronting prospective employees with unexpected problems demanding creative solutions, they are, very possibly, rehearsing future job performance.
When the Colts were interviewing Peyton Manning and Ryan Leaf, something similar happened at the key moment. At first glance, it seems like the question about the first thing each player would do after draft day wouldn’t reveal much about all the other days to come. But the guys probably weren’t prepared for the question, and so they had to reveal how they’d face a rapidly shifting reality that they had no experience in dealing with, a reality just like the one they’d face the day after the draft when they’d go from being college students on campus to wealthy adults in the big world. That makes the question pertinent. And that explains why the answers that came back were telling. They distinguished a great hire from one of the sports world’s monumental bungles.
On the other side, what kinds of questions reveal employees’ personalities but not their job skills? Interview consultants typically warn managers to avoid asking about these subjects:
• Sex life
• Opinions about homosexuality
• Beliefs about contraception
• Personal finances
• Religious faith
• Political affiliations
Except in special circumstances (a job is with a church, a political party, or similar), these kinds of questions fall under the category of privacy invasion.
Finally, there are legal red lines to respect. While managers should ensure that applicants are old enough to work and so can confirm that people are, say, eighteen or older, it’s discriminatory in the legal sense to hire one person instead of another because of an age difference. This means asking “how old are you?” is an off-limits question. It’s also illegal to ask about citizenship, though you can ask whether applicants are legally authorized to work in the United States. It’s illegal to ask about disabilities, except as they relate directly to the job. It’s illegal to ask about past drug and alcohol use, though you may ask applicants whether they are now alcoholics or drug addicts.
The interviewer’s fundamental responsibility is to choose the best applicant for the job while giving everyone a fair shot. Being fair isn’t difficult; all you need to do is just ask everyone the standard questions: Why do you want to work for our company? What are your strengths? How do you work with others? Do you stay cool under pressure? The problem here, though, is that it’s easy to get gamed. It’s too easy for applicants to say, “I love your company, I’m a team player, and I never get mad.” Since everyone knows the questions and answers, there’s a risk that everything will be fake. And that makes identifying the best applicant nearly impossible.
One response to this is to junk the standard questions and come up with surprising and (seemingly) crazy questions like they do at Google. Another strategy is a different kind of interview. A situational or behavioral interview asks candidates to show how they work instead of talking about it.
Here’s how it goes. Instead of asking an applicant, “Do you stay cool under pressure?” (the correct response is “yes”), the question gets sharpened this way:
You know how jobs are when you need to deal with the general public: you’re always going to get the lady who had too much coffee, the guy who didn’t sleep last night and he comes in angry and ends up getting madder and madder…at you. Tell me about a time when something like this actually happened to you. What happened? How did you deal with it?
It’s harder to fake this. Try it yourself, try inventing a story. Unless you’re a real good liar, you’re going to hear the slipperiness in your own voice, the uncertainty and stammering that goes with making things up. Probably, most people who get hit with situational questions are going to opt for the easiest route, which is tell the truth and see how it goes. So the advantage to this kind of interview is that it helps sort out qualified candidates by giving an unvarnished look at how they confront problems. On the other side, however, there’s also a disadvantage here, one coming from the fairness side. If candidate A has spent years at the counter of Hertz and candidates B through G have all been working in the Hertz back office, of course the counter person is going to do better.
Key Takeaways
• In publicizing a job opening, a tension exists between limiting the job announcement to ensure that applicants are appropriate, and widely publicizing the announcement to ensure that applicants include highly qualified individuals.
• Decisions about how broadly to publicize a job opening can be implemented through nepotism, internal public job announcements, and mass public job announcements.
• Screening job applicants makes the hiring process more efficient but raises ethical concerns.
• Common screening techniques involve BFOQs, educational requirements, high-risk lifestyles, criminal record, and an applicant’s social media history.
• Testing allows applicants’ suitability for a post to be measured but raises ethical concerns.
• Common tests include skill tests, psychological and personality tests, honesty tests, medical tests, and drug tests.
• Applicant interviewing provides valuable information for evaluating job candidates, but questions ought to be fair and pertinent to job-related concerns.
Exercise \(1\)
1. Why might an employer opt for nepotism when hiring?
2. What is an advantage of a mass public job announcement?
3. Invent a job description that would allow applicants to be screened by a BFOQ.
4. Why might an applicant pool be screened for use of social media?
5. List the three requirements for a fair and legitimate job-applicant test.
6. How do psychological and personality tests work through correspondence?
7. Imagine a job and then an interview question for applicants that would not be pertinent and one that would be pertinent.
8. Why might a behavioral interview be used? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/08%3A_Manager's_Ethics-_Getting_Promoting_and_Firing_Workers/8.01%3A_Hiring.txt |
Learning Objectives
1. Explore the limits of wage confidentiality.
2. Delineate the uses and ethics of wages as a work incentive.
Two Salary Issues Facing Managers
Two salary issues facing managers are wage confidentiality and the use of wages as a work incentive. Starting with wage confidentiality, in the private sector it’s frequently difficult to discover what an organization’s workers are paid. Because of freedom of information laws, many salaries in government operations and contracting are available for public viewing, but in the private sector, there are no laws requiring disclosure except in very specific circumstances.
The main ethical reason for keeping wage information concealed is the right to privacy: agreements struck between specific workers and their company are personal matters and will likely stay that way. Still, ethical arguments can be mounted in favor of general disclosure. One reason is to defend against managerial abuse. In a law firm, two paralegals may have similar experience, responsibilities, and abilities. But Jane is single and living in a downtown apartment while John has just purchased a home where his wife is living and caring for their newborn. Any boss worth his salt is going to see that Jane’s got no local commitments and, who knows, she may just up and decide to spend a few months traveling, and then make a run at living in some different city. Maybe she likes skiing and a few years in Denver doesn’t sound bad. John, on the other hand, is tied down; he can’t just walk away from his job. He can always get a new one, of course, but if money’s tight and a recession is on, there’s an incentive to raise Jane’s salary to keep her and not worry so much about John who probably won’t be going anywhere anyway. That seems to be taking unfair advantage of John’s personal situation, and it also seems like paying someone for something beyond the quality of the work they actually do. But if no one knows what anyone else is making, the boss may well get away with it.
Stronger, the boss may actually have an obligation to try to get away with it given his responsibility to help the company maximize its success.
Another argument against confidentiality is the general stand in favor of transparency, and in this case, it’s transparency as a way of guaranteeing that ethical standards of equality are being met. Since the signing of the Equal Pay Act in 1963, the ideal of “equal pay for equal work” has become a central business ethics imperative in the United States. But it’s hard to know whether the equality is really happening when no one knows how much anyone else is making.
Of course, workers do frequently know how much other people are getting. In an extreme case, if you’re laboring in a union shop, it’s probable that your wage scale will be set identically to those of your companions. Even if you’re not unionized, though, people still talk at the water cooler. The result is, in practice, that some wage transparency is achieved in most places. From there, arguments can be mounted for the expansion of that transparency, but in most cases, the weight of privacy concerns will carry the day.
Another wage issue concerns its use to provide a work incentive. Many sales positions have the incentive explicitly built in as the employees receive a percentage of the revenue they generate. (That’s why salespeople at some department stores stick so close after helping you choose a pair of pants; they want to be sure they get credit for the sale at checkout.) In other jobs, generating a motivation to work well isn’t tremendously important. The late-night checkout guy at 7-Eleven isn’t going to get you out of the store with cigarettes and a liter of Coke any faster just because his salary has been hiked a dollar an hour. Between the two extremes, however, there are significant questions.
Probably, the main issue involving the use of wages as a carrot in the workplace involves clarity. It’s quite common, of course, for managers to promise an employee or a team of workers a pay hike if they win a certain account or meet productivity goals. Inevitably, the moment of the promise is warm and fuzzy—everyone’s looking forward to getting something they want, and no one wants to sour things by overbearingly demanding specifics. The problems come afterward, though, if the terms of the agreement have been misunderstood and it begins to look like there’s an attempt to worm out of a promised salary increase. It is management’s responsibility as the proposers of the accord to be sure the terms are clearly stated and grasped all around:
• What, exactly, needs to be accomplished?
• How much, exactly, is the wage hike?
The mirror image of promised wage hikes to encourage improved worker performance is the bonus paid at year’s end to employees marking a job well done. In a letter to the editor of the Greensboro News-Record in North Carolina, a teacher cuts to the central ethical problem of the bonus: on the basis of what do some employees receive one while others don’t? Some teachers, the writer states, “at schools with high ‘at-risk’ populations and students coming from homes where education is just not valued, work themselves into a tizzy every year, but because of the clientele they serve, will never see that bonus money. Inversely, schools with middle-class clienteles have teachers who work hard, but also others who merely go through the motions but usually can count on that bonus because their students come from homes that think education matters. Where is the justice in this?” Bill Toth, “Entire State ABC Bonus System Unfair,” News-Record.com, Letters to the Editor, August 19, 2008, accessed May 24, 2011, blog.news-record.com/opinion/letters/archives/2008/08/.
It’s not clear where the justice is, but there’s no doubt that bonuses aren’t serving their purpose. The problem here isn’t a lack of clarity. No one disputes that the rules for assigning a bonus are clear. The problem is that the rules don’t seem to account for divergent working conditions and challenges.
The important point, finally, is that even though a bonus is extra money outside the basic salary structure, that doesn’t mean it escapes the question, “Where’s the justice in this?,” coming with every decision about who gets how much.
Key Takeaways
• Wage confidentiality pits the right to privacy against the desire for, and benefits of, transparency.
• Wages and bonuses are used to provide a work incentive, but problems arise when the pay increments don’t obviously align well with promises or with job performance.
Exercise \(1\)
1. Why might a company want to maintain wage confidentiality?
2. What is an example of a payment bonus becoming disconnected from work performance? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/08%3A_Manager's_Ethics-_Getting_Promoting_and_Firing_Workers/8.02%3A_Wages.txt |
Learning Objectives
1. Distinguish criteria for promoting employees.
2. Locate and define ethical issues relating to promotion.
The Drinking Strategy
If you want a promotion, does going out for drinks with the crew from work help the cause? Here’s a blog post; it’s about two uncles—one who goes drinking with the crew and one who doesn’t—and you’ll see why the answer might be yes:
Look at my uncles, they both work for Ford and one has been in his position for 10-plus years and still doesn’t have a company car, while my other uncle has a company car, increase salary, paid training. Even though he comes home to my auntie blinded drunk in the end it’s all worth it if you want to be noticed. Maya, “Alcohol: Income Booster?,” Monster (blog), September 20, 2006, accessed May 24, 2011, monster.typepad.com/monsterblog/2006/09/alcohol_ income_.html.
Get hammered to get promoted! Too good to be true? Probably.
But not entirely, the Reason Foundation commissioned a report on the question of whether drinkers earn more money than nondrinkers. Bethany L. Peters and Edward Stringham, “No Booze? You May Lose,” Reason Foundation, September 1, 2006, accessed May 24, 2011, http://reason.org/news/show/127594.html. The title “No Booze? You May Lose” pretty much tells what the study concluded about the link between social drinking with workmates and promotions. A few things should be noted, though. Drinking doesn’t mean coming home blind drunk every night; it just means taking down alcohol in some amount. And the payoff isn’t huge, but it is respectable: about 10 percent pay advantage goes to the wet bunch compared to those workers who stay dry. The really interesting result, though, is that guys who drink in bars at least once a month get another 7 percent pay advantage on top of the 10 percent. The bad news for drinking women is that for them, going to the bars doesn’t seem to help.
So there are two findings. First, just drinking is better than not drinking for your wallet. Second, at least for men, drinking socially at bars is even better. One of the study’s authors, Edward Stringham, an economics professor at San José State University, comments on the second result: “Social drinking builds social capital. Social drinkers are networking, building relationships, and adding contacts to their Blackberries that result in bigger paychecks.” Bethany L. Peters and Edward Stringham, “No Booze? You May Lose,” Reason Foundation, September 1, 2006, accessed May 24, 2011, http://reason.org/news/show/127594.html.
Now, going back to the blog comment about the drunken uncle, isn’t this more or less what the blogger sees too? Here are the next lines from the entry:
No senior management wants to promote a boring old fart. They want outgoing people, in and outside of work. They want social people. If you can display your social abilities to them, it means that you want more than the 9am to 5pm, thank God, time to go home. They want people who enjoy working with the company and the people who they work for. Maya, “Alcohol: Income Booster?,” Monster (blog), September 20, 2006, accessed May 24, 2011, monster.typepad.com/monsterblog/2006/09/alcohol_ income_.html.
That sounds reasonable, and it may explain why there’s some serious scientific evidence that partying with the workmates does, in fact, lead to promotions in the company.
The link between lifting a glass and moving up may be solid, but is it right? From the worker’s side, there’s not a lot you can do about the situation so you may want to leave some Thursday and Friday evenings available for happy hour regardless of whether you think that’s the way promotions ought to be arranged. From management side, however, there is a stark issue here. When you sit down to look at two candidates in your company for one promotion, do you have a right to consider how well they mix after hours? Do you have a duty or responsibility to consider it?
There are two issues:
1. Should you consider a worker’s party aptitude?
2. If you do, how should you manage it?
The reasons for not considering party ability are many. Two stand out. First, workers are being paid for what they do from nine to five. That’s the job. If you’re going to start considering other things, then why stop at parties? You could give the promotion to the better player on the company softball team, or the one who’s got curlier hair, or whatever. Second, workers may not have an equal opportunity to party. The guy who lives closer to work and isn’t married obviously holds an advantage over the guy who has diabetes when gin and tonics become job qualifications.
On the other hand, when workmates gather after work to drink, what do they talk about? Well, work. That’s why people say a new advertising campaign or a fresh product idea got scratched onto a napkin. It’s not a metaphor. Further, the ability to labor together with others—teamwork—that’s a real job qualification, and it’s reasonable to suppose that people who get along well drinking will carry the camaraderie over to the next morning’s breakfast meeting (where coffee and tea are served). This explains why companies including Deloitte Consulting encourage and even to some extent pressure employees to socialize outside the office. Deloitte Consulting: WetFeet Insider Guide (San Francisco: WetFeet), accessed May 24, 2011, www.wellesley.edu/Activities/homepage/consultingclub/wetfeet%20-%20deloitte_consulting.pdf.
Finally, it’s a hard call—there are reasonable arguments to be made on both sides. It’s also difficult to be absolutely certain how the party qualification should be managed if it’s included in the performance evaluation. On one hand, a strong case can be made for transparency and openness, for simply stating that after-hours socializing is, in fact, a part of the job. To not inform workers, the argument goes, that hanging out is a job requirement is really a form of lying: it’s dishonest because the default understanding typical employees are going to have is that what counts in determining the quality of work is the work, period. Whether the assigned task got outlined in a cubicle or on a bar stool is irrelevant. Therefore, any manager who secretly totes up the social aptitude of the workers is not being honest about the way workers are graded. It’s the equivalent of a college teacher assigning grades partially based on class participation without listing that in the syllabus.
On the other hand, all teachers know that listing class participation as part of a student’s grade can lead to brown nosing, and there’s a similar threat in the workplace: if employees are told to party, then at least a few are going to tag along for drinks even when they really don’t want to go and end up souring the evening for everyone. If you as a manager believe in honesty above all, then you may accept that cost. On the other hand, if your vision of corporate responsibility dovetails more closely with profit maximization, you may be able to build an ethical case around the idea that in the name of evaluating employees as perfectly as possible some elements of that evaluation may have to remain close to the vest.
Three Considerations for Promotion: Work Performance, Seniority, Projected Work Performance
When managing a promotion, there are three fundamental considerations; work performance is the most obvious. The person most deserving to step up to a higher level of responsibility is the one who’s best managed current responsibilities. This may be measured by accounts won, contributions to a larger group, or some other work-related factor, but the key is that the measured performance be related with the job.
The problem comes in determining exactly what that word related means. When read narrowly, it means that the employee who looks best on paper—the one who’s written the best reports, achieved the highest sales, won the most cases—will be the most deserving. When read broadly, however, the range of considerations can expand dramatically to include contributions having to do with personality, chemistry, and other characteristics tangential to nine-to-five tasks. This is where questions about going out for drinks after work start to gain traction and importance. Finally, it’s not clear that after-hours socializing should be considered part of work performance, but the fact that it can be included shows how broad this category is.
The second consideration when weighing a promotion is seniority. Seniority is preference for promotion granted to the person who’s been with the company the longest. A strong or pure seniority system simply reduces the choice to comparisons of time with the firm: the promotion goes to the longest-serving employee. There’s a taste of fairness here since no one will be overlooked for a job because of a personal conflict with the boss, or because he doesn’t smile enough at work, or because her skirt is too short or his necktie too absurd or whatever. More, there’s an inherent tranquility in the fact that all employees know exactly where they stand. The connected problem, obviously, is that good work is not directly rewarded. This explains why the seniority system seems especially suited to production line jobs or any kind of labor where experience is more important than analytic skills, high-level training, or creativity. If it’s true that experience is what matters on a job, then a seniority system should produce promotions that more or less dovetail with expertise and the ability to do a good job.
A weak seniority system considers time with the company as a positive element, but only as one component in evaluating candidates for a promotion. The advantage of this kind of system is the encouraging of worker loyalty. The retention of good workers is nearly the highest human resources priority of any company, and rewarding seniority plus performance gives good workers a reason to stick around. Equally important, it helps retain good, loyal workers without forcing the company to promote old-timers who’ve never really learned to get the job done well.
The third promotion consideration is projected performance, which evaluates candidates in terms of what they’ll be able to do in the future. A tool used by companies to groom young people for future leadership roles, the escalation normally goes to highly qualified individuals currently working at a level beneath their ability. For example, a health insurance company may hire a college graduate with a strong premed profile and hope to keep that person out of medical school by pulling her up the career ladder at a crisp rate. She simply doesn’t have the experience, however (no one does), to just start near the top. In order for her to play a leadership role in the future, she does need to be familiar with how the company works at every level, including the lowest. That means spending some time on the front lines, say, manning telephones, answering questions from (frequently frustrated or angry) customers. Of course it’s difficult to really stand out in this kind of work, so if she’s going to move up, it’s going to have to be because she’s expected to stand out at something more demanding later on.
Other employees are going to be tempted to resent the rapid ascension since many of them have done just as well at the same job for a longer time. Within the narrow view of performance evaluation (your job performance equals how well you do the work) their resentment is justified. The rule of equal treatment is being severely broken. But if you’re in management, you have a responsibility to the company (and to shareholders if the company is public) to be successful. And you need to face the problem that highly educated and qualified young people have options. Arguably, retaining them is a higher priority—not just financially but also ethically—than keeping more replaceable talent content.
Key Takeaways
• Work performance is defined in diverse ways, and managers may have a right to consider after-hours activities as part of that definition.
• Three common criteria for awarding promotions are seniority, work performance, and projected performance. Each contains specific ethical tensions.
Exercise \(1\)
1. Why might someone’s social skills be considered a factor in receiving a promotion?
2. What are some advantages and disadvantages of seniority promotion?
3. Why might a promotion be based on projected performance? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/08%3A_Manager's_Ethics-_Getting_Promoting_and_Firing_Workers/8.03%3A_Promoting_Employees.txt |
Learning Objectives
1. Define legal guidelines on firing employees.
2. Elaborate justifiable reasons for deciding to fire.
3. Set standards for the actual firing process.
4. Consider ways of limiting the need to terminate employees.
Optimal Level Firing
A study funded by the CATO Institute and titled “The Federal Government Should Increase Firing Rate” concludes this way: “The rate of ‘involuntary separations’ is only about one-fourth as high in the federal government as in the private sector. No doubt private-sector firing is below optimal as well since firms are under threat of expensive wrongful discharge lawsuits.” Chris Edwards and Tad DeHaven, “Federal Government Should Increase Firing Rate,” Cato Institute, Tax and Budget, no. 10 (November 2002), accessed May 24, 2011, http://www.cato.org/pubs/tbb/tbb-0211-10.pdf.
There is, in other words, an optimal level for firing, and in both the public and private sectors it’s not being met. People aren’t being fired enough.
The strictly economic question here is, “What is the optimal firing level?” No matter the answer, there’s an ethical implication for the workplace: firing workers is a positive skill. For managers to perform well—for them to serve the interest of their enterprise by maximizing workplace performance—the skills of discharging employees must be honed and applied just like those of hiring and promoting.
On the ethical front, these are the basic questions:
• When can an employee be fired?
• When should an employee be fired?
• How should an employee be fired once the decision’s been made?
• What steps can management take to support workers in a world where firing is inevitable?
When Can an Employee Be Fired?
In the world of for-profit companies, most work contracts offer at-will employment. Within this scheme, a clause is written into the contract offering employment only as long as the employer desires. Stated more aggressively, managers may discharge an employee whenever they wish and for whatever reason. Here’s a standard version of the contractual language:
This is an “At Will” employment agreement. Nothing in Employer’s policies, actions, or this document shall be construed to alter the “At Will” nature of Employee’s status with Employer, and Employee understands that Employer may terminate his/her employment at any time for any reason or for no reason, provided it is not terminated in violation of state or federal law.
The legal parameters for firing seem clear.
Things blur, however, once reality hits. As the Cato study authors note, simply the fear of a possible lawsuit does impinge to some extent on the freedom to fire, especially when the discharged worker fits into a protected group. This means older workers, foreigners, or disabled workers may protest that no matter what reasons are given for termination—assuming some are given—the real reason is their age, nationality, or disability. Further, gender protection may be claimed by women fired from largely male companies and vice versa.
Another round of blurring occurs on the state level where legislation sometimes adds specific employee protections, and so curtails employers’ rights. In Minnesota, for example, firing may not be based on a worker’s participation in union activities or the performance of jury duty.
These varied and frequently changing legal protections are the reason managers are typically instructed to keep detailed records of employee performance. If those can be produced to show a pattern of incompetence or simply inadequate results, they can justify a dismissal before a judge, if it ever comes to that.
Even though legal complexities mean managers are well advised to be careful about firing workers, and it’s prudent to be sure that there are directly work-related reasons for the dismissal, none of that changes the fact that at-will hiring gives wide latitude to the company, and fired workers are typically left with few good avenues of protest. One way to see how tilted the table is toward the employer and away from the employee is to compare the American at-will firing system with the European model, where a reasonable cause for termination must be demonstrated. In the United States, employers may more or less fire anyone for any reason, and the burden of showing the termination was illegal or unfair falls entirely on the worker. In Europe, by contrast, the legal burden falls largely on the employer. Instead of the worker having to show the firing was wrong, now the company has to show the firing was right. This is a big deal. It’s like the difference between innocent until proven guilty and guilty until proven innocent. Just cause firing means the company holds the burden of proof: it must demonstrate that the worker wasn’t holding up his or her end of the employment contract. That’s a lot harder to do than just producing some work evaluations to buttress the claim that she wasn’t fired because she’s Jewish or he wasn’t let go because he’s Asian. As opposed to the European reality, the conclusion is, employees in the United States hired at will have few recourses against a company that wants them out.
Finally, it’s worth noting that elements of just cause law have been working their way into the American legal system in recent years.
When Should an Employee Be Fired?
Because the legal footing is usually more or less solid for American managers, the real hard questions about terminating employees aren’t legal ones about what can’t be done but ethical ones about what should be done.
Sometimes firing is unavoidable. Economic slowdowns frequently bring furloughs and terminations. When the company’s books turn red, and after all the easy cost cutting has been done, people need to be cut. Who? There are three broad philosophies:
1. Inverted seniority
2. Workload
3. Recovery preparation
Inverted Seniority occurs when the last worker hired is the first released. This works especially well for assembly-line-type labor where one worker can replace another easily. As long as replacement is possible, dismissing the most recently hired allows clear and impersonal rules to make downsizing orderly.
Workload firings focus the pain of job cuts on that part of the company suffering most directly from a falloff in business. An office furniture supply company may find its line of hospital products unaffected by an economic downturn (people keep getting sick even if they don’t have a job) so layoffs are taken from other divisions. This may mean losing workers with higher seniority or better job performance, but it minimizes cash-flow disruption.
Recovery preparation takes the long view on an economic slowdown: firings and layoffs are executed not so much to compensate for the present downturn but to sharpen the company for success when the economy bounces back. Staying with the office furniture supply company, the owner may see better long-term opportunities for profits in the nonhospital units, so the downsizing may occur across the board. The idea is to keep those slow-moving units at least minimally prepared to meet new demand when it eventually comes.
Sometimes economic slowdowns don’t reflect a problem with the larger economy, they’re the result of fundamental changes in the market, frequently brought on by technological advance. For example, the popularization of digital photography has shrunk the market for old fashioned film. Seeing this coming, what can a company like Kodak do? They’re probably going to let workers from the old film side go to create room for new hires in the digital division. This is potentially unfair to terminated workers because they may be doing exemplary work. Still, it would be unfair—and financially disastrous—to the company as a whole to not change with the times.
Rank and yank is a management philosophy promoted by former General Electric Company CEO Jack Welch. Every year, he counsels, the entire workforce should be ranked and the bottom 10 percent (“There’s no way to sugarcoat this,” he says) should be fired to make room for new employees who may be able to perform at a higher level. Here, the responsibility to the company is being weighed far heavier than the one to the employee because, theoretically at least, those in the bottom 10 percent may be doing fine on the job—fulfilling their responsibilities adequately—it’s just that others out there who could be hired to replace them may do it better. In the hope they will, workers who’ve done nothing wrong are sacrificed. Allan Murray, “Should I Rank My Employees?,” Wall Street Journal, accessed May 24, 2011, http://guides.wsj.com/management/recruiting-hiring-and-firing/should-i- rank-my-employees.
There are two main criticisms of this practice. First, it’s a betrayal of employees who are fulfilling their contractual obligations (they’re just not overperforming as well as others). Second, it’s counterproductive because it lowers morale by drowning workers in the fear that even though they’re doing what’s being asked, they may end up in that dreaded bottom 10 percent.
Employee misbehavior is the least controversial reason to fire a worker. Here, the ethics are relatively clear. Employees aren’t being mistreated when they’re dismissed because it’s their own actions that lead to their end. Standard definitions of misbehavior include
• rudeness toward clients or customers,
• drinking or drugs on the job,
• theft of company property or using company property for personal business,
• frequent and unexplained absences from work,
• entering false information on records,
• gross insubordination,
• fighting or other physical aggression,
• harassment of others (sexual, sexual orientation, religious, racial, and similar).
How Should an Employee Be Fired Once the Decision’s Been Made?
At the Friday all-staff meeting the office manager stands up to announce, “The good news is the following people have not been fired!” He reads a list of seventeen names. There are nineteen people at the meeting.
That’s from a (perhaps unemployed) comic’s stand-up routine. Unfortunately, people have written into the CNNMoney.com with real stories that aren’t so far removed:
• An employee received news of her firing in a curt letter delivered to her home by FedEx.
• A man tells of being halted at the building door by security and being humiliatingly sent away.
• People report that they arrived at their office to find the lock changed and their stuff thrown in a box sitting on the floor. “Worst Ways to Get Fired,” CNNMoney.com, September 6, 2006, accessed May 24, 2011, http://money.cnn.com/blogs/yourturn/2006/09/worst-ways-to-get-fired.html.
All these are inhumane firings in the sense that no flesh and blood person took the trouble to present the bad news.
It’s easy to understand why inhumane firings occur: not many people enjoy sitting down with someone and telling them they’re out. So it’s tempting to yield to cowardice. Instead of facing the worker you’ve fired, just drop a note, change the lock, talk to security. On the ethical level, however, firing an employee is no different from working with an employee: as a manager, you must balance your duties to the company and the worker.
How can the manager’s duty to the organization be satisfied when terminating a worker? First, to the extent possible, the fired person should leave with a positive impression of the organization. That means treating the employee with respect. No mailed notices of termination, no embarrassing lockouts, just a direct, eye-to-eye explanation is probably the most reliable rule of thumb.
Second, the terminated employee should not be allowed to disrupt the continued work of those who remain. If deemed necessary, security personnel should be present to ensure the ex-worker leaves the premises promptly. Also, if the worker is involved in larger projects, a time for severance should be found when their contribution is minimal so that other members of the team will be able to carry on near normally. (It may be recommendable to arrange the termination to coincide with the finishing of a larger project so that everyone may start fresh with the new, substitute employee.)
Third, the financial costs of the termination should be minimized. This means having clear reasons for the termination and documents (pertaining to worker performance or behavior) supporting the reasons to guard against lawsuits. Also, there should be clear understandings and prompt payment of wages for work done, as well as reimbursements for travel expenses and the full satisfaction of all monetary obligations to the employee. This will allow the human resources department to close the file.
With duties to the company covered, how can the manager’s duty to the employee be satisfied? Consultants—both legal and ethical—typically share some bullet-point answers. First, the employee should be addressed honestly and directly with a clear explanation for termination. Speak firmly, the advice is; don’t waver or provide any kind of false hope. Further, the termination should not come as a total surprise. Previous and clear indications should have been given concerning employee performance along with specific directions as to what areas require improvement. Many companies institute a structure of written warnings that clearly explain what the employee’s job is and why their work is not meeting expectations.
Second, getting fired is embarrassing, and steps should be taken to minimize the humiliation. The employee should be the first to know about the discharge. Also, the severance should occur in a private meeting, not in view of other workers. To the extent possible, the employee should have an opportunity to say good-bye to workmates or, if this is the preference, to leave discreetly. For this reason, a meeting late in the day may be chosen as the appropriate time for notice to be given.
Third, to the extent possible and within the boundaries of the truth, an offer should be extended to provide a recommendation for another job.
Fourth, make sure the employee gets all the money coming for work done, without having to jump through hoops.
What Steps Can Management Take to Support Workers in a World Where Firing Is Inevitable?
One response to the inescapable reality that firing happens is preemptive; it’s to reduce the moral uncertainty and hardship before they arise. Two strategies serve this purpose: actions can be implemented to minimize the occasions when firing will be necessary, and steps can be taken to reduce the severity of the firing experience for employees when it happens.
In her book Men and Women of the Corporation, Rosabeth Moss Kanter generates a list of measures that corporations use to diminish firings, and reduce the professional impact for those who are let go. Here’s an abbreviated selection of her recommendations, along with a few additions:
• Recruit for the potential to increase competence, not simply for narrow skills to fill today’s slots.
• Rotate assignments: allow workers to expand their competence.
• Retrain employees instead of firing them.
• Offer learning opportunities and seminars in work-related fields.
• Subsidize employee trips to work-related conferences and meetings.
• Provide educational sabbaticals for employees who want to return to school.
• Encourage independence and entrepreneurship: turn every employee into a self-guided professional.
• Keep employees informed of management decisions concerning the direction of the company: What units are more and less profitable? Which ones will grow? Which may shrink?
• Ensure that pensions and benefits are portable.List adapted from Rosabeth Moss Kanter, Men and Women of the Corporation (New York: Basic Books, 1993), 330–31.
Key Takeaways
• At-will firing grants employers broad legal latitude to discharge employees, but it does not erase ethical concerns.
• Justifiable worker firings include cases where workers bear none, some, or all of the blame for the discharge.
• The act of firing a worker requires managers to weigh responsibilities to the organization and to the ex-employee.
• Steps can be taken to limit the need for, and effects of, employee discharge.
Exercise \(1\)
1. What’s the difference between at-will and just cause firing?
2. How might fundamental changes in the marketplace require a company to fire workers?
3. What is rank and yank?
4. When managers fire employees, what duties do they hold to the organization, and what are the duties to the dismissed worker?
5. What are some steps organizations can take to protect their workers from the effects of discharge if firing becomes necessary? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/08%3A_Manager's_Ethics-_Getting_Promoting_and_Firing_Workers/8.04%3A_Firing.txt |
Fashionable
Source: Photo courtesy of Ralph Aichinger, http://www.flickr.com/photos/sooperkuh/3275153928/.
In her blog Love This, MJ (full name not provided) relates that she’s been an aspiring clothes designer since she started sewing tops for her Barbie dolls. Things weren’t going well, though, as she tries to break into the industry. One thing she notices is that there aren’t a lot of female fashion designers out there—Vera Wang, Betsey Johnson, and a few more. Not many. So she starts trying to figure it out with questions like these:
• Do women want straight guy designers to dress them because they dress to please the men? It could make sense: what that designer likes, the man in her life is going to love too.
• Do women prefer gay men to dress them because gay men are their new girlfriends? Gay men are usually more receptive to trends and physical appearances too.
• Do women prefer women designers because she knows a woman’s body better?
• Do men have the same issue? Do some men prefer a lesbian designer? Would they balk at being dressed by a gay designer? “Sexual Orientation in the Fashion Industry,” Love This! (blog), accessed May 24, 2011, lovethis.wordpress.com/2007/07/28/sexual-orientation-in-the-fashion-industry.
Exercise \(1\)
1. Assume MJ is right when she hypothesizes that most women like straight male designers because straight guys are the ones they’re trying to impress, so they want clothes straight guys like. Now imagine you’ve been put in charge of a new line of women’s clothes. Your number one task: sales success. You’ve got five applicants for the job of designing the line. Of course you could just ask them all about their sexual orientation(s), but that might leave you open to a discrimination lawsuit. So could you devise a test for new applicants that’s fair—that gives everyone an equal chance—but still meets your requirement of finding someone who produces clothes that straight guys get excited about?
2. Four standard filters for job applicants are
• education level,
• high-risk lifestyle,
• criminal record,
• flamboyant presence in social media.
Which of these might be used to winnow out applications for a job as a clothes designer? Explain in ethical terms.
3. MJ wonders whether women might prefer women designers because she knows a woman’s body better. Is there a bona fide occupational qualification for a women’s fashion company to hire only women designers? Is there a difference between a BFOQ based on sex and one based on sexual orientation?
4. MJ asks, “Do women prefer gay men to dress them because gay men are their new girlfriends?” Assume you think there’s something to this. Could you design a few behavioral interview questions that test the applicants’ ability to become girlfriends (in the sense that MJ means it) with their clients? Would these be ethically acceptable interviews, or do you believe there’s something wrong and unfair about them?
God at Work
Source: Photo courtesy of Geoff Stearns, http://www.flickr.com/photos/tensafefrogs/1523795/.
The University of Charleston is a private, nonreligious institution with a very particular job opening: the Herchiel and Elizabeth Sims “In God We Trust” Chair in Ethics. According to the job description, the successful candidate for this job as a professor “must embrace a belief in God and present moral and ethical values from a God-centered perspective.” Rob Capriccioso, “Divinely Inspired Bias?,” Higher Ed, March 1, 2006, accessed May 24, 2011, http://www.insidehighered.com/news/2006/03/01/charleston.
Exercise \(2\)
1. You’re in charge of getting applicants for this post and you’ve got a small advertising budget. What ethical responsibilities should you consider when determining where to place the ad? How broadly should you advertise the position?
2. According to Erwin Chemerinsky, a law professor at Duke University, “The description that ‘candidates must embrace a belief in God and present moral and ethical values from a God-centered perspective,’ violates the Civil Rights Act as religious discrimination in employment.” Rob Capriccioso, “Divinely Inspired Bias?,” Higher Ed, March 1, 2006, accessed May 24, 2011, http://www.insidehighered.com/news/2006/03/01/charleston. Imagine you’re in charge of every step of the process of filling this job. How could you respond in terms of
• bona fide occupational qualifications (BFOQs),
• testing,
• interviewing?
3. You’re the university president. The person who currently holds the In God We Trust Professorship has, by all accounts, been doing a mediocre to poor (but not directly unacceptable) job. One day you happen to trip across the person’s blog page and notice that your professor claims to be a sadist and practices a mild form of devil worship (also, the prof’s favorite movie is The Omen). Right now the In God We Trust Professor of ethics is down the hall lecturing to seventy-five undergrads. You sneak to the door and listen from outside. The professor sounds just like always: dull and passionless, but the talk is about the Bible, and nothing’s being said that seems out of line with the job description. Still, you decide to terminate the relationship.
• In a pure at-will working environment, you can just fire the professor. But imagine you want to demonstrate just cause. How does this change the way you approach the situation? What would your just causes be?
• The professor’s classes are passionless because he doesn’t believe in what he’s teaching. Still, his teachings are not directly wrong. Does this case show why a manager may be ethically required in certain situations to implement a strategy of rank and yank? Explain.
Testing Baseball Players' DNA
Source: Photo courtesy of katkimchee, http://www.flickr.com/photos/midwestkimchee/206762729/.
The New York Times reports that there’s a “huge difference between sixteen and nineteen years old,” when you’re talking about prospects for professional baseball. A kid whose skills knock your socks off for a sixteen-year-old just looks modestly good when he practices with nineteen-year-olds.Michael S. Schmidt and Alan Schwarz, “Baseball’s Use of DNA Raises Questions,” New York Times, July 21, 2009, accessed May 24, 2011, http://www.nytimes.com/2009/07/22/sports/baseball/22dna.html?hp.
This is a significant problem in the Dominican Republic, which produces excellent baseball players but little in the way of reliable paperwork proving who people really are and when they were born. The Cleveland Indians learned all about that when they gave a \$575,000 bonus to a seventeen-year-old Dominican named Jose Ozoria, only to later find out he was actually a twenty-year-old named Wally Bryan.
This and similar cases of misidentification explain why baseball teams are starting to apply genetic tests to the prospects they’re scouting. Typically, the player is invited to provide a DNA sample from himself and his parents to confirm that he’s no older than he claims. The player pays for the test and is reimbursed if the results show he was telling the truth.
Exercise \(3\)
1. Many experts in genetics consider testing an unethical violation of personal privacy.
• What does it mean to “violate personal privacy”?
• Can a utilitarian argument (the greatest good for the greatest number should be sought) in favor of DNA testing in the Dominican Republic be mounted? What could it look like?
2. In the baseball world, other tests that clearly are allowed as part of the hiring process include testing a player’s strength and speed. Is there anything in the fair application of these tests that may ethically allow—even require—that baseball teams extract DNA to confirm the age?
3. Assume you accept that testing a prospect’s age is a bona fide occupational qualification (after all, the job is to be a prospect: a developing player, not an adult one). Once you accept that, how do you draw the line? Couldn’t teams be tempted to use DNA facts for other purposes? The Times article interviews a coach who puts it this way:
I know [the baseball teams taking the DNA samples] are looking into trying to figure out susceptibility to injuries, things like that. If they come up with a test that shows someone’s connective tissue is at a high risk of not holding up, can that be used? I don’t know. Michael S. Schmidt and Alan Schwarz, “Baseball’s Use of DNA Raises Questions,” New York Times, July 21, 2009, accessed May 24, 2011, http://www.nytimes.com/2009/07/22/sports/baseball/22dna.html?hp.
Can you formulate an ethical argument in favor of teams secretly using DNA tests to do just that, check for as many yellow and red flags as possible in the young prospect’s genetic code?
4. Baseball scouting—the job of hiring excellent future players and screening out mediocre ones—is very competitive. Those who do it well are paid well; those who don’t are cycled out quickly to make room for someone else. You have the job, you have the DNA sample. What do you do? Why?
5. You decide to do the test in question four. The problem is people aren’t trees; you can’t age them just by counting genetic rings—you also need to do some cross-testing with the parents’ DNA. You do that and run into a surprise: it turns out that the young prospect’s father who’s so proud of his athletic son isn’t the biological dad. Now what?
• Is there an argument here against DNA testing, period? What is it?
• Remember, the family paid for the test. Do you have a responsibility to give them these results? Explain.
6. Lou Gehrig was the first athlete ever to appear on a box of Wheaties. From 1925 to 1939 he played for the Yankees in every game: 2,130 straight appearances, a record that lasted more than fifty years. He was voted into the baseball Hall of Fame in 1939. He died in 1941 from a genetic disorder—yes, Lou Gehrig’s disease—that today’s DNA tests would identify. Is there an ethical argument here against DNA testing of prospects or one in favor? Or is the argument about this more theoretical—should the rules be decided regardless of what has actually happened at some time or place? Explain.
7. In a different sport, the sprinter Caster Semenya won the world eight-hundred-meter challenge in 2009 with a time that few men could equal. She looked, in fact, vaguely like a man, which led the International Athletics Federation to run a genetic gender test. She is, it turns out, neither a woman nor a man; she’s a hermaphrodite: a little bit of both. Does the fact that genetic tests don’t always return clean, black-and-white results make their use less advisable from an ethical perspective? Why or why not?
Windfall at Goldman
Source: Photo courtesy of Manuel Cernuda, http://www.flickr.com/photos/melkorcete/180238980/.
Goldman Sachs is an expansive financial services company. Many clients are institutional: private companies and government organizations wanting to raise cash seek Goldman’s help in packaging and then selling stock or bonds. On the other side, private investors—wealthy individuals wanting to multiply their riches—receive a hearty welcome at Goldman because they have the cash to purchase those stocks and bonds. Ultimately, Goldman Sachs is a hub where large companies, governmental powers, and wealthy people come and do business together.
Executives at Goldman Sachs are among the world’s highest paid. According to a New York Times article, “At the center of Goldman’s lucrative compensation program is the partnership. Goldman’s partners are its highest executives and its biggest stars. Yet while Goldman is required to report compensation for its top officers, it releases very little information about this broader group, remaining tightlipped about even basic information like who is currently a partner.” Susanne Craig and Eric Dash, “Study Points to Windfall for Goldman Partners,” New York Times, January 18, 2011, accessed May 24, 2011, dealbook.nytimes.com/2011/01/18/study-points-to-windfall-for-goldman-partners/?hp.
The rest of the article investigates this shadowy partnership. The conclusions: “Goldman has almost 860 current and former partners. In the last 12 years, they have cashed out more than \$20 billion in Goldman shares and currently hold more than \$10 billion in Goldman stock.”
This tally of accumulated wealth in Goldman stock doesn’t even include the standard salary and cash bonuses the partners receive, but leaving that aside, here’s the math: \$30 billion divided by 860 divided by 12 should give some sense of the wealth each of these corporate stars is accumulating over the course of a year. To give a provisional idea of how large the number of dollars is here, when you try plugging \$30 billion into an iPhone calculator, you find the screen can’t even hold a number that long. Using a different calculator yields this result: \$2.9 million per partner every year.
The 2.9 million can be compared with the salary earned by the average American: \$50,000 a year. The Goldman partner gets that in less than a week. This huge money explains the clawing fight that goes on inside Goldman to become a partner. The odds are long. Each time the books are opened to admit a new class, only 1 of 330 Goldman employees makes the cut. It is, in the words of one former partner, “a very Darwinian, survival-of-the-fittest firm.”
In the public comments section of the New York Times story about Goldman, a person identified as GHP picks up on the firm’s characterization as a “Darwinian, survival-of-the-fittest” place. He wrote, “The French revolution was also very Darwinian, let’s give that a try.” During the French Revolution, the wealthy and powerful were rewarded with a trip to the guillotine.
Probably, GHP isn’t just annoyed about how much money executives at Goldman make, he, like a lot of people, is peeved by the fact that the company was bailed out by the federal government during the 2008–9 financial crisis. Had the taxpayers (people making \$50,000) not kicked in, Goldman might’ve gone bankrupt, and all that money its partners accumulated in stock would’ve vanished. As it happens, the US government’s bailout was masterminded by US Treasury Secretary Henry Paulson. His previous job was CEO (and partner) at Goldman.
Exercise \(4\)
1. Goldman is dominated by a “Darwinian, survival-of-the-fittest” mentality. What does that mean?
• In ethical terms, how can this mentality be justified?
• Would a company dominated by this mentality, whether it’s Goldman or not, be more likely to announce job openings to a limited public, or as a massive public announcement? Why?
2. Describe the advantages of a “behavioral interview.” If you were in charge of hiring for a company seeking employees who flourish in a survival-of-the-fittest environment, what kind of question might you ask in a behavioral interview? Why?
3. One contributor to the New York Times comments section writes, “There are sure to be lots of pointed, angry posts about how unfair it is that these guys make so much money etc. But if we are honest, there is a fair amount of envy and pure remorse that we weren’t bright enough to go down that path! And these guys are very bright.”
How could these comments be construed to explain why high wages and big bonuses are used by Goldman to motivate its workers? What is it that makes big money (or the possibility of big money) function as a powerful motivator to encourage employees to work hard and well? Ethically, how can this use of big money be justified?
4. One difference between offering an employee a wage increase and offering a bonus is that the latter doesn’t come automatically the next year. The employee has to earn it from scratch all over again.
• Why might managers at Goldman award their best workers with a bonus instead of a wage increase?
• By appeal to an ethical theory, could you make the case that, in general, employees should be paid mainly through a bonus system? How would the theory work at two extremes: wealthy Goldman executives and waitresses at a corner diner?
5. Given the kind of work that’s done at Goldman—bringing wealthy people and powerful organizations together to make deals—why might party aptitude (the ability to mix socially after hours) be considered when deciding who does and who doesn’t make partner at Goldman? How could that decision be justified ethically? How could it be criticized ethically?
6. Make the case that in theoretical terms, managers at Goldman have an ethical responsibility to institute the process of rank and yank.
The Five O'Clock Club
Source: Photo courtesy of C.P. Storm, http://www.flickr.com/photos/cpstorm/140115572/.
A Washington Post story about firing employees relates that some companies use “the surgical method: terminations that last about 15 seconds, after which former employees are ushered off company property.” Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, accessed May 24, 2011, www.washingtonpost.com/wp-dyn/content/article/2009/08/08/AR2009080802659.html?hpid=topnews.
It doesn’t have to be that way, though. For about \$2,000 per fired employee, the outplacement company Five O’Clock Club will help employers manage the actual termination moment more compassionately. Later on, the fired worker receives a year of career coaching to help get back on track.
What does the Five O’Clock Club recommend managers do at the critical moment when giving the bad news? To answer, according to the Post, they offer a booklet titled How to Terminate Employees While Respecting Human Dignity, which “asks managers to approach layoffs with the understanding that, ‘unlike facilities and equipment, humans have an intrinsic worth beyond their contribution to the organization.’ ”Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, accessed May 24, 2011, www.washingtonpost.com/wp-dyn/content/article/2009/08/08/AR2009080802659.html?hpid=topnews.
Then some catchphrases are provided for managers to use:
• George, you’ve been a trooper. I’m sorry that this organization has moved in a different direction.
• George, you have made many good friends here. We hope those friendships will continue.
• George, you have made considerable and long-lasting contributions and they are acknowledged and appreciated. Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, accessed May 24, 2011, www.washingtonpost.com/wp-dyn/content/article/2009/08/08/AR2009080802659.html?hpid=topnews.
Five O’Clock Club vice president Kim Hall—who downs a lot of Tylenol and coffee on the job—relates several other phrases that may be helpful:
• I know this is hard, but you’ll get back on your feet.
• The timing could actually work in your favor. A lot of people take vacation in the summer. There’s no competition for job hunters.
• Maybe this is a chance to begin your dream career. Follow your heart. Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, accessed May 24, 2011, www.washingtonpost.com/wp-dyn/content/article/2009/08/08/AR2009080802659.html?hpid=topnews.
In sum, the Five O’Clock Club helps workers feel better when they’re fired, and helps them get on with their lives. Meanwhile, employers get a hedge against lawsuits. The outplacement service, according to the Five O’Clock Club literature, “can redirect anger or anxiety away from the organization and…encourage the newly-fired to sign their severance agreements so they can get on with their lives.” Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, accessed May 24, 2011, www.washingtonpost.com/wp-dyn/content/article/2009/08/08/AR2009080802659.html?hpid=topnews.
Exercise \(1\)
1. The Five O’Clock Club charges \$2,000 per firing. If you were fired, would you prefer to receive the compassionate end the Five O’Clock Club provides, or just get shown the door but also get to keep that \$2,000 for yourself?
• If you’re the boss, do you have the right to decide this for the fired employee? Why or why not?
• If you’re the boss, do you have the responsibility to decide this for the fired employee? Why or why not?
2. According to the Five O’Clock Club, “Unlike facilities and equipment, humans have an intrinsic worth beyond their contribution to the organization.”
• Does this sound like utilitarian ethical thinking to you, or is it more in line with the notion of an ethics guided by basic duties and rights? Why?
• Probably, everyone agrees that humans aren’t just machines that can be installed and replaced. But can an ethical argument be made to treat people in the workplace as machines—that is, to abruptly hire them when they’re useful and fire them when they’re not? What ethical theory (or theories) could help you make the case?
3. In general terms, here are three firing situations:
• an economic downturn (good workers are sacked because the company can’t afford to keep them)
• rank and yank (workers are fulfilling their duties but not as well as most of the others)
• misbehavior (a worker is fired directly because of something done or not done)
Looking at these three contexts and the Five O’Clock Club, do you think their services should be hired in all three situations? Do the ethics of firing change depending on why the person is being fired? Explain.
4. Recall some of the Five O’Clock Club’s prepacked firing sentences:
• George, you've been a trooper. I'm sorry that this organization has moved in a different direction.
• George, you have made many good friends here. We hope….
• George, you…are acknowledged and appreciated.
• Maybe this is a chance to begin your dream career. Follow your heart.
The contrasting method of firing employees—the surgical method—is to look the person in the eye, say you’re fired, and have security march the ex-employee out the door, all in less than a minute.
• Is it possible to make the case that the surgical method is actually more compassionate and respectful?
• Is there a place for compassion in business? From a manager’s perspective, how should compassion be defined within a business context?
5. Maybe the Five O’Clock Club gets hired because a company really wants to help and support fired employees. Or maybe the company doesn’t really care about them; all they want is to avoid wrongful termination lawsuits. Ethically, does it matter why the company contracts the Five O’Clock Club? Explain. | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/08%3A_Manager's_Ethics-_Getting_Promoting_and_Firing_Workers/8.05%3A_Case_Studies.txt |
Chapter 9 examines some ethical decisions facing managers. It considers how leaders guide organizations by selecting and then instilling the specific values and culture that define a workplace.
09: Manager's Ethics- Deciding on a Corporate Culture and Making It Work
Learning Objectives
1. Define the concept of corporate culture or, more broadly, organizational culture.
2. Learn to recognize and distinguish specific organizational cultures.
3. Consider ways that a culture may be instilled in an organization.
I’m a Mac, and I’m a PC
“I’m a Mac, and I’m a PC” is the first line from a set of advertisements produced for Apple.“ ‘Get a Mac’ Collection,” YouTube video, 9:39, posted by “Aploosh,” February 26, 2007, http://www.youtube.com/watch?v=siSHJfPWxs8. Two guys stand in front of a white screen, a step or two apart. The one pretending to be an Apple Macintosh computer looks a lot like you’d expect the typical Apple computer user to look: casual, young, and cool; he’s not stressed but certainly alert and thoughtful. He hasn’t had a haircut in a while, but the situation isn’t out of control. He speaks up for himself without being aggressive. His t-shirt is clean, his jeans reliable, and his tennis shoes stylish. The PC, on the other hand, can’t relax in a polyester suit that’s a half size too small, especially for his inflated waistline. Bulky glasses slide down his greasy nose. Short, parted hair glues to his head. He’s clean, shaven, and very earnest. In one of the commercials, the PC man talks about the things he does well: calculation, spreadsheets, pie charts. The Mac responds that he feels more comfortable helping users make their own movies and organize their music collections.
Underneath these ads there are two very different corporate cultures, two very different kinds of companies making two very different products even though both sell their machines in the store’s computer section. Now, because this is advertising and it’s paid for by Apple, we should take the claims being made with a grain of salt. And, obviously, Apple didn’t air these spots because they wanted to exhibit their corporate culture. They wanted to sell computers (and hammer the competition in the process). None of that, however, changes the fact that the commercials do a good job of displaying what a difference between corporate cultures looks like. It looks like these two guys. They’re both capable and dedicated, but everything about each of them makes the other one squirm; it’s hard to imagine they could work well together because their habits and comportments—everything from how they dress to the way the talk—is so completely different.
The same can be said about workplaces. It’s easy to imagine a kind of office where PC fits nicely. People there would wear ties and skirts. They’d be punctual. Their days and working styles would be regimented and predictable. Employees would have their own cubicle offices, and anyone proposing an “informal Friday” break from the dress code would be looked on with suspicion. By contrast, Mac would function well in an open, warehouse-like space with a bike rack out front. Flextime would be common—that is, people arriving earlier or later in the morning depending on their preference and on the circumstances of their lives (whether they have children, when they can avoid rush-hour traffic). Regardless of when they show up, they take responsibility for making sure they log a full workday. The attire would be casual and diverse. Maybe the boss wears jeans. Some people would probably be annoying others with their loud music, but everyone would force smiles and be tolerant.
One of the reasons the Apple ad works well is that it resists the temptation to simply say Apple is superior. Yes, PC is dorky and Apple is cool, but Apple does admit that PC really is better at analytic-type activities like producing clean spreadsheets. The same mixed findings apply to corporate culture. At the PC office, the clothes aren’t nearly as comfortable as the ones you find at the Mac place, but at least there aren’t any guys wearing jeans that fall a little too low over their back end. And the flextime scheduling at Apple may make for a happier workforce, but only until it happens that a project suddenly arises and needs to be executed immediately, and one of the key participants has flex-timed and already left for the day. The other team members are left, that means, to do his share of the work. What about the bike racks outside? Everyone agrees that it’s great that the Mac people are peddling to work, but only until a morning thunderstorm pops up and no one can make it to the office. The point is there are advantages and drawbacks to every corporate culture. It’s hard to say that one is better than another (just like Macs work for some people while others prefer PCs), but it’s certainly true that there are different value systems beneath the distinct cultures.
Anyone who has a management role in any organization will be expected to have a grip on what values guide the enterprise and how they reflect in the day-to-day life of people on the job. Further, some managers—and all entrepreneurs—will not only need to apply guiding values; they’ll have to select and create them.
Definitions of Corporate Culture
Corporate culture is easier to get intuitively than put into words. Because you can’t touch it, measure it, or take its picture (even though you can show two people in an advertisement who obviously belong to different corporate cultures), it’s not surprising that there’s no consensus definition attached to the term. Here are three attempts to put the idea in words. A corporate culture is
• “the shared beliefs top managers have in a company about how they should manage themselves and other employees, and how they should conduct their business”;“Can this Man Save Labor?” BusinessWeek, September 24, 2004, 84.
• “the pattern of shared values and beliefs that gives members of an institution meaning and provides them with rules for behavior in their organization”;Robert Kuttner, “Labor and Management—Will They Ever Wise-Up?” BusinessWeek, May 9, 1994, 16.
• “a general constellation of beliefs, mores, customs, value systems and behavioral norms, and ways of doing business that are unique to each corporation, that set a pattern for corporate activities and actions, and that describe the implicit and emergent patterns of behavior and emotions characterizing life in the organization.”Simon Head, “Inside the Leviathan,” New York Review of Books, December 16, 2004, 88.
There are common threads to these cited definitions and some points that may be added:
• Corporate culture is shared; it’s not like a regulation or a code that’s imposed from some specific place outside the organization. The culture may begin that way, but once installed, it belongs to all those participating in the workplace.
• Corporate culture provides guidance. It’s not a potted plant to be looked at; corporate culture tells an employee that the Daffy Duck necktie is too far out there and should be left in the closet. The pumpkin necktie, however, is OK as long as we’re coming up on Halloween. Analogously, though more significantly, it tells a salesman whether it’s OK to flagrantly lie to a customer, to stretch the truth a little, or only to play it straight.
• Corporate culture provides meaning in the organization; it tells members why they are there. At Goldman Sachs, the bottom line really is the bottom line: people are there to make money. At Greenpeace, by contrast, people arrive in the morning to protect the planet, and while it’s true that many receive a paycheck for their efforts, that’s not the reason they show up for work.
• Corporate culture is top heavy; management carries the heaviest burden. Unlike simple office codes—such as turning in your expense reports within a week of terminating travel—that apply to people more or less uniformly, the burden of understanding and promulgating the organization’s culture falls heavily, though not exclusively, on the leaders.
• A corporate culture is a constellation of values, a set of ways of seeing the business world.
• The constellation of cultural values is dynamic; everyone involved every day stretches and pushes the organization’s culture.
• An organization’s culture is organic; it’s born and grows with the organization. It dies there too.
• The organization’s culture includes life values, ones that cross beyond purely business concerns to touch questions including, “Is it OK to date someone from work?” “Can I cry at my desk?” “Will anyone object if I have a shouting match with my wife from the telephone in my cubicle?”
This list isn’t exhaustive. It does, however, show how thoroughly corporate culture penetrates the workday.
What’s My Organization’s Culture?
Managers’ job responsibilities include protecting and promoting their organization’s culture. Fulfilling the responsibility requires determining exactly what culture lives in the workplace. There’s no secret decoding mechanism, but there are a number of indicating questions that may be asked. One of the most natural is to brainstorm associated words. For example, imagine visiting two offices, one filled with people who look like the Apple Mac from the commercial, and the other with those who’d fit naturally into the office where PCs are bought and used. Just looking at the commercial and jotting words as they flow might lead to lists beginning this way:
• On the Apple side: sloppy, fun, warm, loose, careless, resigned, informal, smart, creative, soft-spoken, controlled, cool, and haughty.
• On the PC side: uptight, formal, reliable, demanding, uncomfortable, determined, perfectionist, detail oriented, disciplined, unconcerned with appearances, and geeky.
These are short, rapidly composed lists, but they’re developed enough to observe two profiles of work-life peeking out. You can see that that the Apple office is going to fit closely with values including comfort, innovation, and independence, while the PC office will be more compatible with values including reliability and responsibility. You can count on the PC office to get things done, but if you’re looking for something outside the box, you may be better off going the Apple route.
Other questions getting at the heart of an organization’s culture and basic values include these dealing with the workplace time: How many hours are expected at work each week? Is there flextime? Is there telecommuting? Is there a punch clock or some other kind of employee time-in-the-office monitoring? Is it more important that the employee be present or that the work gets done? In some offices it’s the former; in others, the latter.
Then there are questions about employee interaction. Is each worker situated in a private room or a more open, common space? Do people tend to compete with each other or is teamwork a higher value? To the extent there’s individual competition, how far does it go? Is it a good-natured jousting, or closer to hostile blood sport? Of course different kinds of organizations are going to recommend themselves to one side or the other of the spectrum. For example, a doctor’s office, an archeological dig, a construction company are relatively good places to value teamwork. A stockbroking office, a pro basketball team, and an actors’ studio are spots where you may want to encourage individuals to outdo those around them.
What’s the workplace mood? Fun? Somber? Energetic? Modern? Traditional? Many Volkswagen dealerships are remarkable for their huge windows and sunlight; it’s a kind of work environment for the sales staff meant to encourage an open, airy feel conducive to car buying. Elevated heating and cooling costs go along with all that glass, however, and different workplaces where money is valued more than ambience may choose to cut operating costs with a drabber space. Going beyond the architecture, different offices have different moods. It’s pretty rare that you see practical jokes or trash-basket basketball games going on at the dentist’s office. On the other hand, anyone who’s ever operated a call center telephone knows there’s a solid chunk of each workday dedicated to high jinks.
Is the workplace personalized? Some office cubicles burst with family snapshots and personal memorabilia. Most assembly lines, on the other hand, are practically devoid of individual touches.
Are employees workers or people doing work? If the former—if the value the organization attributes to those receiving paychecks is limited to what they do to earn the check—then few resources will be dedicated to supplementals and benefits. On the other side, a corporate culture valuing its employees as people may provide extra vacation time, health insurance, and retirement plans. Branching out further, you can get an idea of a workplace culture by checking to see if a gym or exercise room is provided. Day care for those with young children is another sign of the corporate culture that values workers as integral people.
Dress codes reflect the organization’s values. Is uniformity or individuality more highly prized? If uniformity is the rule, what kind is it? In some advertising agencies, for example, the people who work in the creative department conceiving the commercials at first appear to be a diverse collection of independent-minded dressers, but get a few together and you’ll immediately perceive a uniform that’s as binding as the most traditional office—it’s just that ratty jeans replace slacks and clever t-shirts replace neckties.
Another cultural indicator runs through the employees’ leisure time. Where do people hang out? Do they go to football games, the opera, church? Do they spend their weekend mornings on family excursions because they have spouses and children, or are they still in bed, sleeping off the night before? More, is leisure time spent with coworkers? Do employees get together just because they enjoy each other’s company? If they do, the social outings are more likely to occur in connection with organizations seeking a harmonious workforce and expending resources to foster camaraderie on the job. They’re less likely to occur at organizations where everyone is fiercely competing with everyone else, as sometimes happens, for example, at stockbrokerages.
Healthy community interaction is a value emphasized in some corporate cultures. Everyone has seen the “adopt a highway” signs indicating that a local firm or group has taken responsibility for keeping a stretch of highway litter-free. The professional sports leagues have traditionally asked players to dedicate some season and off-season time to community outreach. Other kinds of organizations, by contrast, may not even have a local community. Telecommuting and cloud computing mean employees can easily form a functioning organization with members living in different states, even different countries.
Social cause activism is another marker of corporate culture. The shoemaker TOMS Shoes fights rural poverty in developing nations by donating shoes. Other companies focus entirely on doing well in the for-profit marketplace.
Political action may (or may not) infuse a corporate culture. Many companies steer clear of overt or even hints of political partisanship for fear of alienating one or the other half of the electorate. This is especially true for larger enterprises spread across the entire country, drawing consumers from liberal corners of San Francisco, conservative bastions of north Dallas, and the libertarian towns of New Hampshire. Local businesses, however, especially those catering to relatively homogenous communities, may find no downside to flipping the switch on political activism and breeding partisanship as a guiding value. The company Manhattan Mini Storage provides (obviously) storage for household items in Manhattan. Their big competition comes from warehouses in New Jersey. The Manhattan Mini Storage billboard ads read, “If You Store Your Things in New Jersey, They May Come Back Republican.” This appeal may work pretty well in central New York City, but it won’t seem very funny most other places.
Like politics, religious belief and doctrine are rarely set at the center of the largest corporations, but smaller outfits operating in a narrow social context may well embody a particular faith.
Conclusion. Taken together, these categories of values begin shaping the particular culture defining an organization.
How Is Organizational Culture Instilled?
A specific culture may be instilled in an organization through a set of published rules for employees to follow or by the example of leaders and employees already working inside the organization.
Instilling a culture through established rules typically means publishing an organizational code governing behavior, expectations, and attitudes. The multinational firm Henkel—the company that invented laundry detergent and today produces many cleaning and health products sold under different brand names around the world—has published this kind of code. It’s quite long, but here’s an edited section:
Shared values form the foundation of our behavior and our actions throughout Henkel. Every single person plays a key role here. It is the sum of our actions that makes Henkel what it is—a lively corporate culture in which change is embraced as opportunity and everyone is committed to continuous improvement.
Our Values
1. We are customer driven.
2. We develop superior brands and technologies.
3. We aspire to excellence in quality.
4. We strive for innovation.
5. We embrace change.
6. We are successful because of our people.
7. We are committed to shareholder value.
8. We are dedicated to sustainability and corporate social responsibility.
9. We communicate openly and actively.
10. We preserve the tradition of an open family company. Henkel North America, Vision and Values (Düsseldorf, Germany: Henkel AG & Co., 2008), businessethicsworkshop.com/Chapter_9/images/HenkelNorthAmerica_ Vision_and_Values.pdf.
This statement sounds good in general. The stubborn problem, however, with trying to capture a corporate culture with a string of dictates and definitions parallels the ones constantly faced in ethics when trying to make decisions by adhering to preestablished rules and duties: frequently, the specific situation is far more complicated than the written code’s clear application. So, in the case of Henkel, we learn that they embrace change, but does that mean employees can change the dress code by showing up for work in their pajamas? Does it mean managers should rank and yank: should they constantly fire the lowest-performing workers and replace them with fresh, young talent in order to keep turnover going in the office? There’s no way to answer those questions by just looking at the code. And that creates the threat of an at least perceived cultural dissonance within the organization—that is, a sense that what actually happens on the ground doesn’t jibe with the lofty principles supposedly controlling things from above.
Social Conditioning
The second form of instilling a culture doesn’t work through rules but through social conditioning; it’s not about written codes so much as the cues provided by the customs of the workplace, by the way people speak and act in the organization. New employees, in other words, don’t read handbooks but look around, listen, and try to fit in.
In his book Business Ethics, O. C. Ferrell lists some of the social ways a culture infiltrates the organization.O. C. Ferrell, John Fraedrich, and Linda Ferrell, Business Ethics, 7th ed. (Boston: Houghton Mifflin, 2008), 181. Selecting a few of those and adding others yields this list:
1. The founder’s ethical legacy to the organization may contribute to its living culture. Walmart’s founder Sam Walton was a legend in austerity; he industriously minimized costs so in-store prices could be lowered correspondingly. This is a continuing aspect of Walmart’s cultural legacy, though it can be controversial on other fronts. Some complain that Walmart is in essence encouraging third world sweatshop labor by ruthlessly granting contracts to lowest-cost providers.
2. Stories and myths embedded in daily conversations may indicate culturally appropriate conduct. Warren Buffett, leader of the Berkshire Hathaway investment group is a kind of Yogi Berra of the finance world, a highly skilled professional with a knack for encapsulating pieces of wisdom. Here’s a paraphrase of one of Buffett’s thoughts, “I’m rich because I’ve always sold too early and bought too late.” Conservative investing, the lesson is, yields value for shareholders. It’s also a high ethical value within the corporate culture he tries to nurture.
3. Heroes or stars in the organization may consistently communicate a common message about the organization’s guiding values. There’s a difference between lists of values written up in a handbook and a group of leaders who together consistently talk about guiding values and live by them.
4. The dress, speech, and physical work setting may be arranged to cohere with the organization’s values. The United Nations threw a wrench into its own efforts to reduce global carbon emissions by scheduling its thirteenth annual global warming meeting in Bali. The weather was nice there, but since most participants came from the United States and Europe, it became difficult not to notice that the values of the organization’s handbook (control of carbon emissions) didn’t jibe with the values of the organization’s members (burn tons of jet fuel to work in a place with sunny beaches). On the other hand, the UN Foundation—which advocates reduced greenhouse gas emissions and similar—recently moved into an environmentally friendly building with cubicles formed from a biodegradable product and many similar, environmentally friendly features. “UN Foundation Green Building,” YouTube video, 2:23, posted by “unfoundation,” February 14, 2008, accessed May 25, 2011, http://www.youtube.com/watch?v=15_MdcSUlSY.
5. An organizational culture may reinforce itself through self-selective processes. A self-selective process is one where individuals effectively select themselves into a group as opposed to being chosen by others. Hiring presents a good example. Presumably, when an organization hires new employees, certain filters are constructed to reduce the applicant pool to those most likely to succeed. The process becomes self-selective, however, when job interviews are conducted as they are at Google. There, perspective employees are faced with bizarre questions that have nothing to do with the typical “Why do you want to work at Google?” and “Why would you excel at this job?” Instead, they get the following:
• You have five pirates, ranked from five to one in descending order. The top pirate has the right to propose how a hundred gold coins should be divided among them. But the others get to vote on his plan, and if fewer than half agree with him, he gets killed. How should he allocate the gold in order to maximize his share but live to enjoy it? (Hint: One pirate ends up with 98 percent of the gold.)
• A man pushed his car to a hotel and lost his fortune. What happened?
• Explain the significance of “dead beef.”
In response, some applicants will dive into the challenges excitedly, while others will find the whole process really weird and prefer not to be caught within a mile of a place where job interviewers ask such bizarre questions. In the end, those who enjoy and want to continue with the job application process are precisely those who will fit in at Google. Perspectives, that means, select themselves.
Conclusion. Two ways a corporate culture may be instilled and nurtured in a workplace are a list of codes to be followed and a set of social techniques that subtly ensure those sharing a workspace also share values corresponding with the organization.
Key Takeaways
• An organizational culture is the set of values defining how and why members live at work.
• Distinguishing an organizational culture requires observing a range of values from the way people dress to the degree of cooperation and competition in the workplace.
• An organization’s culture may be instilled through codes and rules.
• An organization’s culture may be instilled through social cues and pressures.
Exercise \(1\)
1. List five aspects of a corporate or organizational culture.
2. Describe two workplace decisions that may be determined by a corporate culture.
3. List some questions you could ask about a workplace that would start to give you a sense of its culture.
4. What are five ways that an organization may attempt to instill a culture through social conditioning?
5. In your own experience in a job or any organization, what’s an example of social conditioning that enforced the place’s culture? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/09%3A_Manager's_Ethics-_Deciding_on_a_Corporate_Culture_and_Making_It_Work/9.01%3A_What_Is_Corporate_Culture.txt |
Learning Objectives
1. Delineate an ethically questionable organizational culture.
2. Consider responses to an ethically questionable organizational culture.
3. Define compliance in the business world.
4. Discuss a way of measuring compliance.
Dishonesty in the Fish Market
A frequently recurring business ethics question involves dishonesty: when, if ever, is it OK to lie, to stretch the truth, to not tell the whole truth? A simple scene of deceit goes like this: A fish dealer sells both expensive salmon caught in the wild and relatively cheap farmed salmon. Occasionally, he switches the farmed for the wild—a change that’s very difficult to detect through appearance or taste, even by expert chefs—and pockets the difference. Randy Hartnell is a fish dealer in New York who suspected that a lot of that kind of dishonest fish switching was going on among his competitors. He investigated and published an Internet report. As he tells it, he visited the famed Fulton Fish Market in lower Manhattan and found some dealers openly admitting that the fish they were selling as wild had actually come from a farm. Randy Hartnell, “N.Y. Times Calls Wild Salmon a Gamble for Consumers,” VitalChoices 2, no. 25 (April 22, 2005), accessed May 25, 2011, www.imakenews.com/vitalchoiceseafood/e_article000389904.cfm.
This led the New York Times to do a follow-up story. Using sophisticated chemical tests, the Times confirmed that, yes, at six of eight places sampled, fish being sold as wild for about thirty dollars per pound was actually farmed salmon, which typically sells for about ten dollars a pound.
In the six bad cases, the person who actually made the switch participated in an organization where one or both of two things were true about the culture:
1. Profit was understood as being more important than honesty.
2. Honesty was presumably important, but recalcitrant workers paid little attention and sacrificed the truth to make a buck.
These are two very different situations, and they lead to distinct discussions: One has to do with choices being made about what specific culture to instill in an organization. The other concerns compliance, which, in the business world, measures the distance between what an organization says it believes and what its members actually do.
An Ethically Questionable Corporate Culture
The first situation—one where a fish seller puts profit above honesty because that’s just the way things are done in the company—is one which most outside observers would categorize as fundamentally corrupt. Everyone inside the operation knows what’s going on—principal and peripheral members are lying to bring in money—and newcomers are meant to pick up on and continue the practice. The organization itself is dishonest.
What responses are available? First, we need to check whether a serious attempt is being made, or there’s a real interest in making a serious attempt, to justify the deceitful actions. If there isn’t, if management and leaders of a fish-selling business aren’t interested in ethical debates, there’s not much ethical arguments can do about it. For those wishing to change a situation like this, the law (criminal and civil) presents good venues for action. Bad publicity in the New York Times might do the trick too.
If, on the other hand, there is an interest on the organization’s part in justifying their actions from an ethical viewpoint, we could ask, “Can institutionalized lying be justified and, if so, how?” Three possible answers run through three distinct ethical theories: duty theory, consequentialist-utilitarian theory, egoism:
1. Can basic duty theories justify putting profits above honesty? Probably not. Duty theories affirm that right and wrong is determined by a set of unchanging rules, and they typically include don’t steal, don’t lie, and similar. Because this kind of ethics starts from the proposition that dishonesty is wrong, it’s hard to see a nonfrivolous way of justifying the fish seller’s deceit.
2. Can a consequentialist-utilitarian theory justify putting profits above honesty? Utilitarian theory is oriented by the common welfare. Acts in business—whether it’s lying or doing anything else—are defined as acceptable or reproachable depending on whether they end up doing the most good for the most people. Any act, the theory affirms, that ultimately makes more people happier is good.
In this case, we can imagine an organization promoting lying as a common operating principal and making the case that the ethical stance is, in fact, good. Every Christmas, department stores deploy heavy men in red suits to proclaim that they live at the North Pole and ride a sleigh pulled by reindeer. The stores promote these fictions—addressed to innocent children, no less—to make money. Almost no one finds that ethically objectionable, however. One reason is that they’re implicitly accepting the affirmation that an act making people happier in the end is good, even if it’s dishonest. Similarly, the CIA covert operations branch (undercover spying, insofar as it truly exists) fits a utilitarian mold. In this organization, lying is good because it ultimately serves the American national interest and the basic principles of liberal democracies. Again here, the effects of what’s done matters more than what’s done. Finally, can this reasoning be applied to the lying fish seller? Maybe. As the New York Times story notes, the truth is that even the highest-level chefs and experts have a hard time distinguishing farmed from wild salmon. There is, therefore, a kind of placebo effect for food. If the fake stuff tastes just as good as the real thing, and the only real difference between selling one or the other is that the fish dealer makes out like a bandit, then an argument could be formed that the double-dealing does, in fact, increase happiness (the fish dealer’s) without hurting anyone else. Therefore, the dishonesty is ethically justifiable. In practical terms, however, it’s difficult to see how this strategy could get too far. Sooner or later someone is going to notice the difference, and as people begin to feel scammed (and therefore unhappy), the justification for the double-dealing crumbles.
3. Can an ethical theory of egoism justify putting profits above honesty? Egoism is a coherent ethical approach to the world that does offer some justification for a deceitful fish trader. On this account, the ethical good for organizations and individuals in the economic world is defined as just whatever serves the organization’s or individual’s interest. And switching in the farmed stuff in for the wild is good for the fish sellers. (It’s hard to find any other explanation for the fact that, as the New York Times discovered, fully 75 percent of the places where fish was sold had some switching going on.) By definition, then, the dealing is ethically justifiable under this theory. Of course, most proponents of egoism in the business world don’t stop there. They go on to note that other, honest dealers who are pursuing their interests have a good reason to reveal the fraud. And, as it turns out, that’s just what honest dealer Randy Hartnell did, presumably helping his own business in the process.
Conclusion. Organizational cultures that incorporate lying as an acceptable part of day-to-day business do exist. Whether or not these cultures are ethically justifiable depends on the deep theoretical stances people adopt when going into business.
The Ethics of Compliance
What happens when an organization’s principles are laudable, but they don’t get put into practice by the people actually doing the work? What happens, the question is, when an enterprise (say, a fish-selling operation) internally promotes basic values including honesty, but outside in the world where the transactions happen, the lesson is lost and individual sellers are swapping farmed for wild salmon?
In the business world, this is called a breakdown in compliance. Of course there are different reasons for compliance failure, everything from a bad-apple employee to a misunderstanding of directions, but the broadest explanation is simply that key elements of the organization’s guiding philosophy aren’t getting through to the members. One response to this possibility is a corporate culture ethics audit.
A corporate culture ethics audit attempts to loosely measure how open channels are between the ethical values stationed at the top, and the actual practices down below, and one common way of doing the measuring is with a questionnaire addressed to all an organization’s members. Strings of questions can be answered simply yes/no or on a numerical scale from strongly agree (5) down to strongly disagree (0). These questionnaires can be distributed and the responses coming back summed and compared with previous samples in the same workplace or against results drawn from other workplaces. The goal is to get a sense of where people are at in terms of putting company ideals into practice.
It goes without saying that a simple questionnaire can, at best, provide only a crude picture of what’s actually going on inside an organization. The process must begin somewhere, however, and two attempts at drawing up auditing questionnaires come from O. C. Ferrell’s Business EthicsO. C. Ferrell, John Fraedrich, and Linda Ferrell, Business Ethics, 7th ed. (Boston: Houghton Mifflin, 2008), 181. and Dr. Arthur Gross Schaefer. A. G. Schaefer and Anthony Zaller, “Strategic Modeling: The Ethics Audit for Non-Profit Organizations,” accessed May 25, 2011, www.austincc.edu/npo/library/documents/Strategic%20Modelng%20The%20Ethics%20Audit%20for% 20Nonprofit%20Organizations.pdf. Combined, and with additions, subtractions, and modifications, the following corporate ethics audit emerges. (As a quick note, this test could be nuanced by changing the responses from yes or no, to agree or disagree on a one-through-five scale. Some audits also add a section for comments.)
a corporate culture ethics audit
Answer yes or no.
Part 1: Corporate Culture as Defined and Understood throughout the Organization
1. Are codes of ethics and business practices clearly communicated to employees?
2. Are there rules or procedures in company publications that may be consulted?
3. Is there a value system and understanding of what constitutes appropriate behavior within the organization that is shared by members at all levels of the organization?
4. Is there open communication going both ways between superiors and subordinates on questions concerning ethics and organizational practices and goals?
5. Have employees ever received advice on how to bring behavior into closer alignment with the organization’s values and norms?
6. Does the organization have methods for detecting ethical and behavioral concerns?
7. Are there penalties that are publicly discussed for transgressions of the organization’s rules and values?
8. Are there rewards for decisions corresponding with the organization’s culture (even if they don’t result in a profit)?
9. Do people at work act in a way that’s consistent with what they say are the organization’s values?
10. Do employees spend their time working in a cohesive way that is in accord with the organization’s values?
11. Does the organization clearly and directly represent its activities and goals in its public communications?
Part 2: Corporate Culture as Organic and Encompassing
1. Does the company recognize the importance of creating a culture that is concerned about people and their self-development as participants in the organization’s values?
2. Do employees treat each other with a respect, honesty, and fairness that correspond to the organization’s values?
3. Are leadership decisions made with an opportunity for input from all relevant sources?
4. To what extent does leadership, the board of trustees or executive committee, view its responsibility as one to represent the entire organization?
5. Are leadership positions open to all members (insofar as such openness coincides with the organization’s values)?
6. Does the professional staff provide services to all members in accordance with organizational policy and regardless of board or leadership status?
7. Are employees satisfied that day-to-day responsibilities correspond with what the organization’s culture has led them to expect?
8. Is turnover low?
9. Are emotional outbursts springing from ambiguity about responsibilities within the organization rare? (I’m in charge here!)
10. Is there an absence of open hostility and severe conflict that goes beyond the internal competition provided for by the organization’s culture?
11. Does the organization address contract negotiations, work expectations, and compensation levels in a way that corresponds with the organization’s values?
12. Are there shared and commonly held beliefs about how to succeed in the organization?
13. Are there day-to-day rituals, habits, and practices within the organization that create direction and prevent confusion on ethical and business matters?
14. Do the dress, speech, and physical work setting prevent an environment of fragmentation or inconsistency about what is right and appropriate for the organization?
15. Does the organization’s involvement in community activities correspond with the effects of the organization’s day-to-day activities?
In its simplest form—with this audit rendered as a string of yes-or-no questions—the yes answers may be summed with a higher number indicating more compliance within the organization.
This audit can be applied to the question initiating this section. If we assume a fish seller is misrepresenting farmed salmon as the more expensive wild variety and if we assume that the larger business for which the fish seller works actually does value honesty within its corporate culture, then we should expect to see an audit like this produce a low score. We should expect to see that employees either aren’t getting the message as to what the corporate culture is, or they’re seeing it as just words, not real values supported on a day-to-day basis by the company’s leaders.
Key Takeaways
• A corporate culture may be evaluated in ethical terms: it may be justified as ethically respectable or challenged as ethically reproachable.
• Compliance in the business world means the organization’s members are acting in accord with the organization’s stated policies and values.
• Compliance may be loosely measured with a corporate culture ethics audit.
Exercise \(1\)
1. In what ways can an ethically questionable organizational culture be challenged by outsiders? In what situations might one way be preferable to another?
2. What is an example of compliance, and an example of failure of compliance, in a fish-selling business that openly values honesty?
3. What does a corporate ethics audit do and how does it do it? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/09%3A_Manager's_Ethics-_Deciding_on_a_Corporate_Culture_and_Making_It_Work/9.02%3A_The_Relation_Between_Organizational_Culture_and_Knowing_the_Right_Thing_to_Do.txt |
Learning Objectives
1. Consider how the organization’s values are reflected in dress codes and grooming codes.
Scenes of Corporate Culture: Dress Codes
Corporate culture is visible on the big issues, including whether a fish-selling business is honest about what consumers are receiving. It also exists, however, in the customs and rules making up quotidian life in the workplace.
One of these quotidian scenes is a dress code, and a glimpse of how one can work comes from AppleInsider, a gossipy online magazine devoted to what’s going on—everything from life at work to product development—inside Apple. The site got its hands on a survey Apple ran of its employees, a version of a corporate culture audit. What Apple was trying to do was get a grip on the corporation’s values as the employees understood them.
According to the study, one notable aspect of Apple culture is the leisurely dress code. “I never dressed nicer than sweat pants. I often came in wearing whatever I slept in the night before and walked around the office barefoot. Nobody cared,” said a customer solutions specialist who works for Apple in Austin, Texas. Kasper Jade and Katie Marshal, “Employees Offer Mixed Reactions to Corporate Life,” AppleInsider, March 30, 2005, accessed May 25, 2011, http://www.appleinsider.com/articles/05/03/30/employees_offer_mixed_reactions_to_apple_corporate_life.html.
The survey presents this as one of the positives of working for Apple. On the other hand, there are people who go to bed at 3 a.m. after a rough party night and still wake up a full hour before leaving for work at 7:45 the next morning because no matter how tired they are, they wouldn’t be caught dead on the street without a shower, some makeup, and the rest. Now, what makes Apple’s culture appealing for many is that both kinds of people can fit in. If you want to dress nicely, great. If grunge is your style, still great. It sounds like this ethical stance in favor of individualism at the core of Apple Incorporated works well.
Listen, though, to the next lines that the same pajama-clad employee wrote in the survey: “There were a lot of communications problems. Micro management to the extreme. I had six different supervisors that did not communicate together and gave me six different answers.”
Well, if part of the corporate culture is to let people be independent to the extreme, dressing however they want, then it’s going to be hard to stop each individual supervisor from supervising in his or her own unique way. This is one of the profound truths about corporate culture: it’s difficult to have part way. If you’re going to raise the values of diversity and individuality, then that’s probably what you’re going to get across the board. If it’s in the way people dress, then it’s probably also in the management style and in the customer relations and in the way people treat each other at work.
Of course no one is going to make the claim that a corporation allowing people to show up for work in pajamas is a scene of great ethical debate. It is, however, a scene of very broad debate. It shows how the values an organization decides to raise up permeate the company; they color everything.
Grooming Codes
Personal hygiene is less easily controlled by the organization than dress because it’s more intimate than clothes and, frequently, more difficult to define. It’s easy to require a necktie; it’s harder to figure out exactly what “well-groomed hair” is.
Some grooming codes aren’t questions of ethics so much as safety or hygiene. For safety reasons, you don’t want a guy who hasn’t had a haircut since the 1960s running the table saw in a lumberyard because his hair may get caught up in the blade with some Hollywood movie results. Similarly with respect to a woman working as a chef in a restaurant, if she refuses to wash her hands or cut her fingernails, the health safety of patrons eating the food she prepares is sufficiently concerning to allow and probably require that the cook be ordered to clean up or be fired.
While health and hygiene issues can normally be resolved by appeals to common reason, more difficult ethical dilemmas arise around the organization’s desire to maintain a uniform and presentable workforce as a way of boosting appeal to consumers. It’s safe to say that business would decline at a McDonald’s if employees were allowed to show up for work unbathed, unshaven, and wearing pajamas. On the other side, however, employees do have lives outside the nine to five, and workplace requirements concerning haircuts and beards obviously wash over to those personal hours.
The conflict between a business’s desire for grooming uniformity and the individuals’ personal freedom to appear in public as they wish centers the case of Brown v. Roberts and Company argued before the Massachusetts Supreme Court in 2008. Bobby T. Brown vs. F. L. Roberts & Co., Inc., accessed May 25, 2011, http://www.socialaw.com/slip.htm?cid=18640&sid=120. The journey to a lawsuit began when the owner of a Jiffy Lube station hired a consultant to improve the business, and one recommendation was a grooming policy requiring neatly combed and trimmed hair, along with the prohibition of beards and mustaches. Consumers, the consultant reported, found that cleanliness and uniformity provided an implicit assurance of trustworthiness and good work. The problem for Jiffy Lube employee Bobby Brown was that he practiced a version of Rastafarianism. For more than a decade he’d faithfully subscribed to a religion that didn’t permit him to shave or cut his hair.
After refusing to abide by the new Jiffy Lube grooming guidelines, Brown was removed from his normal routine, which included working the register and greeting customers, and banished to the lower bay where, out of customer sightlines, he performed the dirty work of servicing cars and trucks. He sued to get his old duties back. The Jiffy Lube owner refused to back down. In court, the owner provided statistics showing that cleaning up the customer service personnel actually improved business, and, the owner added, he had the right to control the public image of his company regardless of whether it improved business or not. Brown countered that his grooming was protected by the fact that it was a religious necessity. The grooming requirement, he maintained, didn’t just interfere with his personal life and religion, it completely desecrated both of them. For its part, the high court punted the issue back down to a lower court.
The law in these cases may be hazy, but the ethics will come down to the foundational views shaping the organization’s working culture. Here are three different solutions to Brown versus Jiffy Lube as they emerge from three distinct organizational cultures:
1. An authoritarian culture defines right and wrong inside a business as just what the highest-ranking individual orders. In this case, the owner is in charge of his shop, and if he determines that all employees must wear short hair, that’s the way the workplace will be. Since there’s no higher code, authority or appeal, people who want to be part of the company will need to accept obedience to the boss.
2. A consequentialist, utilitarian outlook will produce a workplace culture that most highly values the collective welfare of all those involved. The issue is no longer boss versus employee; it’s what’s best for everyone. If this mentality controls the Jiffy Lube franchise, someone may propose that Brown bundle his hair up underneath a cap or agree to work only limited hours up front at times when visits from walk-ins and new clients are minimal. That way the business can prosper (possibly triggering wage increases for all employees), while Brown’s inconvenience is minimized.
3. An ethics of care produces an organizational culture distinct from the previous two. Instead of seeing the workplace as controlled by an owner, and instead of seeing it as a scene of compromise in the name of the general welfare, a Jiffy Lube structured by care will conceive of the workforce as something near a family. In this case, the ethical justification for action will always trace back to the question about whether the act will strengthen and nurture the bonds of all those involved in working together. In the case of Jiffy Lube, this guideline will probably lead to a decision to allow Brown to return to his customary role. It may be that some business will be lost, but if that’s the cost of maintaining the harmony of the work unit as a unit, then the cost will be paid. Of course the owner may still appeal to Brown to cut his hair and shave, but just as members of a family learn to respect (or at least tolerate) the idiosyncrasies and uniqueness of each member, so too a business culture governed by care will ultimately be more interested in preserving Brown’s ties to the group than reforming his character, habits, and presentation.
Conclusion. Some businesses have an interest in controlling the way employees look. The degree to which they’ll control appearances depends on the ethical stance defining their internal values and culture.
Key Takeaways
• An organization’s fundamental values show through in codes regulating dress and grooming.
• The implications of these particular codes and the values beneath them stretch broadly through the organization.
Exercise \(1\)
1. What might a dress code tell you about an organization’s larger culture?
2. Why might a business install a grooming code?
3. Why might a utilitarian vision of the workplace and its values lead to an only partially enforced grooming code? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/09%3A_Manager's_Ethics-_Deciding_on_a_Corporate_Culture_and_Making_It_Work/9.03%3A_Two_Ethically_Knotted_Scenes_of_Corporate_Culture-_Clothes_and_Grooming.txt |
Learning Objectives
1. Show that different kinds of businesses and organizations lend themselves to distinct cultures and guiding values.
2. List and describe questions that may help leaders choose an appropriate organizational culture.
3. Show how specific aspects of an organizational culture may be founded on ethical theory.
Choosing the Right Organizational Culture for Me
For those starting a business, the first question about the values and culture of the new workplace is the simplest: What should they be? There’s no right or wrong answer, but there are different ways that any set of values may be justified.
Diverse fields of work will lend themselves more naturally to one or another organizational style and tone. A fish seller delivering to markets, restaurants, and homes, for example, one entrusted with providing food for others to sell and cook, will need to value punctuality and reliability. This kind of firm must honor its contracts by getting orders delivered to clients when promised and by making sure the quality (at least the quality that consumers perceive) is up to standard. Further, the physical workplace—which stretches from the office where orders are received to trucks delivering goods—will probably function best if the values of fairness, respect, and openness are enforced. The various individuals entrusted with any one account must be able to work together well and produce results individually that the entire group stands behind.
On the other hand, if the small company you’re forming happens to be a rock band, then creativity (as they say in the business world, the ability to think outside the box) steps forward as a cardinal value. When trying to get a nightclub or bar to book your group, you may lie about (or “exorbitantly exaggerate”) the response your songs have gotten from people who’ve listened to you in the garage. You may promise that you’ve got material to present a forty-five-minute show and run out after half an hour. You may not foster mutual respect in the workplace: the lead guitarist may secretly instruct the soundman to reduce the hapless bass player’s volume to near zero or the drummer may show up for work blind drunk and flinging expletives. All those failures in reliability and respect will wash away, though, if you’ve got a new sound and people like hearing it. Fish sellers and rock bands, finally, are different kinds of businesses and the organizational values surrounding them may be similarly divergent.
Even within the same pursuit, even when two corporations are producing comparable products, there’s no requirement that their cultures be similar. In fact, that’s a central point of the “I’m a Mac, I’m a PC” advertising campaign. The appeal being made in these ads isn’t that Apple is better because their processors run a gigahertz faster than a PC’s or because the screen images are crisper or the battery life is longer. Fundamentally, Apple is making the case that the values—as displayed by the style of clothes the actors wear and their way of standing and speaking—are ones the purchaser may want to participate in. Apple, in essence, turns corporate culture into a selling point.
Refocusing on the problem of determining a set of values for an organization, there’s a two-step process: decide the values, then justify them. One way to proceed is by posing some questions aimed at the core of workplace culture.
What Counts as Success?
In some organizations (especially nonprofits and political groupings), success gets defined socially. Perhaps it’s an effort to eradicate homelessness, or diminish the effects of poverty, or advance a legislative agenda. In this kind of endeavor, one existing to serve the greater good, a utilitarian ethical perspective could be employed to justify the organization’s existence and goals. The reason for the organization’s existence fits well with the theory that acts are ethically good if they bring the greatest good to the greatest number.
By contrast, if success for an organization is economic not social, if it’s about me getting rich and not the general welfare, other theoretical foundations may be more recommendable. A culturalist ethics—one that defines moral right and wrong as just what the larger society dictates—might work in this case, at least in the United States where private enterprise and the pursuit of wealth have customarily been regarded as a virtue. Alternatively, a rights-based theory, one that maximizes individuals’ liberty to pursue their own happiness (as long as the rights of others aren’t infringed upon in the process) may work well for those choosing to establish a corporate culture that raises profit as the main goal of the business.
Am I a Collectivist or an Individualist?
If I believe that people work best when they work together, then I may choose to raise collectivism as a central virtue. Individuals are rated professionally in terms of their workgroup’s accomplishments. This kind of organization would recognize a single person’s accomplishment only when it served the efforts of others and individual rewards like bonuses and similar would be severely limited. By contrast, benefits received by one member like health insurance or a year-end bonus would likely be received by all. In the business world, finally, assembly-line work would be a good candidate for collectivism because any finished product is only as good as the weakest part.
On the other hand, someone starting their own business may believe that individuals don’t work best when teaming up with colleagues but when competing against them. In this case, an individualistic corporate culture might be established with workers granted incentives to outperform their colleagues. Pay and benefits in this kind of organization would likely be closely linked to performance and success; those who do well for the company would receive a healthy percentage of the revenue they generate. Further, on the other side, employees shouldn’t make the mistake of thinking that just because the organization is doing well, they’re doing well. They’re not, at least not unless they can show how they contribute personally and significantly to the success. Finally, this orientation of values may be constructed by someone starting up a wholesale fish-selling operation, and hiring a sales force to go out and lure restaurants away from their current providers and give the new company a chance.
What Do I Value More, the Means or the Ends?
One of the curious aspects of the farmed or wild salmon story is that for many (though definitely not all) consumers, there’s really no difference. Their palettes aren’t sufficiently trained, their cooking expertise insufficiently developed for the distinctions between the two kinds of fish to register inside their mouth. If that’s right, if a consumer really can’t distinguish farmed from wild salmon, then is there any harm in selling the farmed variety as wild (at a 200 percent markup)? Some people will answer yes and others no. If you’re on the yes side, if the kind of organization you want to set up will be ruled by what members do more than the results of what’s been done, then an ethics based on duties suggests itself as the right way to go. Within this kind of enterprise, the basic ideas of honesty and respect for others will prevail; they will guide the way people act inside the workplace and also the way the business interacts with customers. You can take people at their word inside this business because telling the truth is a basic element of the organization’s culture.
On the other side, if you look at this and say, “well, consumers are just as happy either way, but selling the farmed fish as wild makes me a lot happier because my profit margin jumps,” then you’ll find a more comfortable spot on the consequentialist side of the ethical spectrum. Here, what people do is less important than the outcome. Decisions about whether an act is acceptable or not are answered by looking at the act’s consequences and nothing else. In this case—and assuming people really can’t tell the difference between the two fish—the way opens to affirming that the general welfare really is improved by the sleight of hand. The fish seller is better off, and no one else has grounds for complaining.
This ethical dilemma—one between valuing the sincerity and the ethical protocol of the actual transaction, and one valuing just the end result and consumer satisfaction—plays out in many and diverse organizational environments. There’s the fish seller debating selling cheap product that tastes expensive. In 2004 Ashlee Simpson got caught lip-synching on Saturday Night Live when the soundtrack kicked in before she opened her mouth and Tom Petty’s 2008 Super Bowl halftime performance looked fishy. Does it really matter, though? In Simpson’s case, it obviously does because she got caught and it ruined her show, but if everything had fit together right, do you think it’s OK for her to pretend she’s live and then go to the tape without anyone noticing? Are people who paid money to see her sing getting cheated?
One organization where this dilemma plays out in quite dramatic terms is police work. It’s an old-time policing phrase that more good has been done with the business end of a nightstick than through every courthouse in the land. It’s unclear whether that’s true, but it gets right to the heart of the question about means or ends. Should a police department be more focused on going by the book, treating all suspects as the written law dictates, or should they be more focused on the ends—that is, punishing criminals and minimizing crime in a community? Take a situation where an officer knows a man is guilty of a violent assault but the evidence isn’t there. Is it OK to plant something? As is the case of the fish seller and the stage performer, the basic values—the way the members have learned to live and act within organization—will dictate what ultimately happens.
How Do I See My Employees?
Many small businesses have only one employee: the owner who doubles as the employer. Others, however, require a workforce. If people need to be hired, the question about how they’re to be valued can’t be avoided. Are they paid mercenaries? Something closer to extended members of a family? Somewhere in between? One type of business where this question can rise quickly is a franchise. In a franchise operation, a parent company sells the rights to a certain name and kind of product to an individual to start their own branch. Domino’s Pizza is a good example. Though there are corporate-owned stores, many of the local Domino’s are owned by their managers. These entrepreneurs agree to buy basic material from the mother business—the pizza dough and so on, as well as the signage and participation in advertising campaigns—and in exchange they’re allowed to command their own small outpost of the pizza empire. The extent of corporate control over particular franchises varies from one business to another, but since the actual owner is the person there from day-to-day and in charge of hiring and firing, the culture surrounding the place is going to be largely determined by the values the owner installs.
With respect to employees, what are the possibilities? A libertarian culture comes close to the mercenary system. Under this ethical umbrella, freedom and the individual pursuit of his or her own happiness become guiding values. Ethical good is defined as that freedom and pursuit, while reprobation is assigned to those acts interfering with others doing the same. In this case, the owner may (though not necessarily) adapt a somewhat disinterested attitude with respect to employees. A certain job is offered at a certain wage and the applicant is free to accept or decline. Acceptance means nothing more than assuming the responsibilities in exchange for a paycheck. Initiating a Domino’s Pizza business, of course, requires hiring many drivers to deliver the product. These aren’t great jobs, driving around and knocking on doors with pizzas, but they may work for students and others who need a little income. Neither the employer nor employee expects any loyalty from each other and the relation continues forward just as long as both benefit, nothing more.
Alternatively, a franchise owner may want to welcome employees as integral parts of the business. An ethics of care suits this purpose. Within this theory, good is defined not as freedom or the pursuit of happiness but as the maintenance and fortifying of social networks and relationships. The workplace becomes paternalist (or maternalist) as workers begin seeing themselves participating in an organic unit. In this case, the owner is much less likely to fire workers who foul up (bring pizzas to the wrong address, incorrectly input customer orders into the computer), and probably more likely to share revenue and benefits with workers as much as possible. Drivers are likely to be trained at other tasks (making pizzas and taking orders being the main opportunities) so that they can participate more fully in the enterprise.
The above questions posed and answered are only a beginning, only the first of many steps on the way to defining and implementing a corporate culture. It’s also true, however, that in the real world people don’t have time to sit down and extensively draw up every detail of their ethical business plan before commencing; every new manager will have to decide for him or herself how far to go on paper before actually beginning to run their operation, whether it’s a Domino’s Pizza franchise or something else. Many will probably just go ahead with the enterprise and pick up ethical things along the way. This isn’t necessarily a bad idea: it’s hard for anyone to know what they believe until they’ve experimented a bit. It is worth noting, however, that these kinds of decisions will have to be made at some point. Staying with the Domino’s example, every franchise has a few drivers who mess up more than the rest and every manager has to draw a line somewhere to mark the point where the driver is let go. When that happens, a decision about the values of the organization—the extent to which drivers are more like mercenaries or members of a big business family—will have to be made.
Some further questions that a manager may ask to help sort out the organizational culture of the operation include the following:
• Who are my consumers? Are they purely a way for me to make money, or something closer to a social network with a financial element attached?
• Am I a short or long termer? Do I see my business as a lifelong project, or is this a quick hit and then I’ll move on to something else?
• Who am I responsible to? Am I doing this for me, my family, the community, the world?
• What are the vital ingredients of success? Does my organization need to value analysis, competence, reliability, creativity, or something else to thrive?
• What’s my organization’s relation with the law? Do I want to obey the letter and spirit of the law, just the letter, just the spirit, or do whatever I can get away with?
• Am I a delegator or a micromanager? Will I give employees goals and let them find ways to accomplish them, or will I monitor their performance every step of the way?
Conclusion. If you’re starting your own business or joining up with friends to put something together, the first ethical questions you’re likely to face are those concerning the organizational culture of your enterprise. It’s true that you can put decisions off, but for most businesses at some point, there’ll need to be a coherent response.
Key Takeaways
• People initiating their own business will need to instill an organizational culture.
• The kind of culture instilled will depend on the style of leadership and the contingencies of the type of business.
• Straight-ahead questions about the most basic elements of the endeavor (what I want from my business, how I will see employees and consumers, and similar) may help define an appropriate corporate culture.
Exercise \(1\)
1. Why might diverse fields of work lend themselves to divergent internal cultures?
2. Picture a business you may want to initiate one day. What are some questions you could ask that might help you get a sense of the kind of culture and values you would erect inside the enterprise? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/09%3A_Manager's_Ethics-_Deciding_on_a_Corporate_Culture_and_Making_It_Work/9.04%3A_What_Culture_Should_a_Leader_Choose_to_Instill.txt |
Learning Objectives
1. Define the concept of a leadership style.
2. Consider what values underlie specific leadership styles.
3. Investigate what kinds of enterprises may be suited to one or another leadership style.
Selecting a Leadership Persona
A persona of leadership is the image you adopt, the kind of person you decide to be when you stand in front of others as a director. What values will be most important to your particular leadership role, and how will they be transmitted? Psychologist Daniel Goleman has identified the following leadership styles in his book Primal Leadership:See Daniel Goleman, Primal Leadership (Cambridge: Harvard University, 2002).
• Visionary. This leader guides an organization’s members toward a shared vision. Establishing and communicating that vision become the primary leadership task and subordinates are granted significant leeway to reach the vision.
• Coach. Members of the organization are challenged to meet specific, relatively accessible goals, and they’re closely supervised—and encouraged—as they work.
• Affiliative. This leader fosters social harmony within the organization and focuses on the human and emotional dynamic of the workplace over immediate work requirements. Nurturing a well-integrated team that works well together is considered the best way to reach the organization’s goals.
• Democratic. These leaders seek active participation from an organization’s members and value consensus in decision making.
• Pacesetter. This leader challenges members of the organization to work and meet goals by setting a strong example, possibly one that most members will be unable to match.
• Commander. This leader gives clear directions and expects compliance.
Of course there are other ways of leading, and elements of these six models may be mixed in a single person, but taken together this group of strategies represents common ways of fostering specific values in the workplace. Two examples—John Buford and Carol Smith—illustrate how the strategies and values function together.
John Buford
In a short video from the Washington Post’s continuing “On Leadership” series, the story of John Buford at Gettysburg in 1863 is examined. “On Leadership at Gettysburg: ‘Find Those Confederate Forces,’” Washington Post video, 4:40, www.washingtonpost.com/wp-dyn/content/video/2010/04/21/VI2010042100960.html. Buford, a general in the Federal army leads a small force of cavalrymen on a mission to locate and engage Robert E. Lee’s Confederate forces. He finds them near Gettysburg and hatches a plan to arrange the coming battle on terrain that will favor the North. While his small group aligns itself on the high ground and begins battling the vastly superior Confederate force, Buford sends word to the main Federal army of his location and the advantage he’s holding. His group is nearly wiped out, but they resist just long enough for Federal reinforcements to flow in and occupy the adventitious ground. Days later, they’ll win the battle. The South never recovered.
Here are the episode’s key aspects according to the Washington Post’s Ed Ruggero:
• As a cavalryman, Buford was accustomed to operating far from headquarters and direct oversight. He was empowered to and able to make his own decisions.
• No preconceived plan can account for all contingencies, so all overarching strategies must leave room for leaders on the ground to shift strategies as the situation requires and take rapid action.
• Buford asked for and got significant (life) sacrifices on the part of his soldiers in the name of the greater good and larger cause.
Along with Buford’s autonomy and decisiveness, the significant ethical trait leaping out of the organization he led was the uniform willingness of those working with him to sacrifice for the larger goal. There is, at the heart of this organization’s culture as it was fostered by Buford, a sense of the importance of the collective over the individual. Buford isn’t the kind of leader who seeks to maximize the individual initiative of the members of his organization and he doesn’t set his team loose into competition with each other. Instead, he fosters firm camaraderie. Within the six types of leadership personas laid out by Goleman, Buford is, not surprisingly, a commanding leader.
Coming at this value from a different angle, Buford’s can be called transformational leadership. In his book Business Ethics, O. C. Ferrell defines this as the ability to transform the members of an organization into devoted and unselfish advocates of its goals. In a word, it means the ability to inspire. O. C. Ferrell, John Fraedrich, and Linda Ferrell, Business Ethics, 7th ed. (Boston: Houghton Mifflin, 2008), 134.
As the Washington Post video underlines, business isn’t war. Still, lessons in leadership—and the basic values animating one or another model—may be common to the two. So what kind of business might invite this commanding style? One possibility, one place that might do well under this model of leadership is a Domino’s Pizza franchise. First, because it’s a franchise outfit, because it’s an outpost of the central organization granted wide latitude and independence, the local manager and owner must be able to make decisions independently. There must be an ability to see a way forward and act even without approval from superiors. For example, all Domino’s locations share in the benefits of the central corporation’s advertising budget, but every individual manager is free to supplement those efforts. A franchisee may decide to send drivers to an apartment complex delivering discount coupons to every door or something similar. What’s important is that every neighborhood is different and offers unique opportunities. Success will require a leader who can get a sense of what might work at a particular place without constantly calling into corporation headquarters for guidance.
Further, with respect to the employees, the commanding style of leadership may be suitable when you take into account that most drivers have relatively little experience in the pizza business and aren’t particularly motivated for the Domino’s team. Almost no one signs up to deliver food because they enjoy it or see a bright future in that line of work. Given that reality, a commanding style—leadership that demands employees follow directions carefully and one that values deference to the delivery policy and rules—may work to keep the operation flowing well. More, the values of transformational leadership—devotion to the organization and the unselfish advocacy of its goals—may function to rally the drivers, to inspire a belief in the cause of the business even if, as is obvious, winning the neighborhood pizza delivery war is far less dramatic and important than Gettysburg.
Carol Smith
Here are a few snippets from a newspaper interview of Carol Smith, a senior vice president and chief brand officer for the Elle Group:
Q: What is the most important lesson you’ve learned about leadership?
A: The importance of winning over employees as opposed to bossing employees.…I sit in the middle of the table, always. I don’t want to sit at the head of the table. I want to be part of the process and part of the decision.
Q: Let’s talk about hiring.
A: You’ve got to meet someone three times, and one of them better be over a meal. It’s like a little microcosm of life. Throughout a meal, the personality comes out. Are you going to connect with us? Are you going to be part of the team, or are you going to be one of these independent players who wants to take all the credit? Are you good with assistants? Those are things you can find out in some subtle ways when you eat with someone. “No Doubts: Women Are Better Managers,” New York Times, July 25, 2009, accessed May 25, 2011, http://www.nytimes.com/2009/07/26/business/26corner.html?_r=1&8dpc.
Referring these thoughts back to the list of six leadership personas, Smith reflects skills and practices of at least two distinct leadership styles: democratic and affiliative. Her custom of sitting in the middle of the table instead of stationing herself at the head isn’t an empty gesture, it’s part of the way she broadcasts openness to countersuggestions and input. Further, this kind of culture—one that values give-and-take and some sense of equality in the decision-making process—is bolstered by the distinction Smith draws between being a boss and being bossy. Being a boss means ultimately making, and taking responsibility for, decisions; being bossy means cowing people into grumbling obedience. It’s presenting herself as the former while resisting the latter that Smith believes makes her style work in her particular organization. Democratic leadership, finally, isn’t the same as political democracy; there’s no indication that Smith decides by taking a vote. But where the two do overlap is in the process preceding decisions: a high value is assigned to an open airing of differences, and to the insistence that all sides be heard and respected.
Smith also participates in an affiliative strategy for managing. When she invites potential new hires to dinner, she’s checking to see if they’ll add to the organization’s social harmony. Notice that Smith is probing for information about whether the new hire will mix with superiors, equals, and subordinates in the workplace. Every direction of social interaction is important. Of course the idea here isn’t that no work gets done because so much stress is placed on people getting along, it’s the opposite: because emotional integration is highly valued in the office, members of the organization are likely to work well together in pursuit of the organization’s goals.
One way of summarizing Smith’s management strategy is that she’s a negotiator, always trying to find ways to get people to come together in agreement. She’s not so interested in locking her employees in a march toward her company’s goals; instead, she activates their participation and then balances individual efforts to keep everyone on the same page. This quality can be called transactional leadership, which means leadership dedicated to getting the members of an organization onboard through give-and-take and inclusion.O. C. Ferrell, John Fraedrich, and Linda Ferrell, Business Ethics, 7th ed. (Boston: Houghton Mifflin, 2008), 134.
Moving into a general business environment, what kind of business might invite the style of leadership Smith promotes? Starting with what can be excluded, a Domino’s franchise probably wouldn’t work very well. In that business, driver turnover is very high, so she’d spend inordinate amounts of time balancing the social dynamic of a workplace that changed personalities on a weekly basis. Also, input from drivers who consider their work to be a McJob and have no experience in the pizza business would be of limited value. It’s very possible, in other words, that the values Smith privileges would quickly lead a Domino’s Pizza restaurant—or any enterprise depending on a large, high-turnover workforce—into red ink.
Apple Incorporated, on the other hand might be a good fit for Smith. We know from the Apple employee survey that the workplace values tolerance and individualism. Within a social dynamic like that, one where people are free to work (and show up for work) as they wish, the great danger is a collapse of the group effort into individualistic, self-centered projects and agendas. It takes an alchemy of personalities to make sure these different types of people are functioning well together despite their explosively individualistic outlook. The value of social harmony as promoted by an affiliative leadership style, consequently, might be crucial for this kind of workplace. Apple also sounds like a place where democratic-type leadership could bear fruit. One of the great advantages of diversity in the office is a wealth of viewpoints. For the right kind of leader—one valuing and encouraging contributions from every direction—that diversity can be translated into a maximum number of options for action. Of course if the leader is weak, those divergences will result in chaos; the trick is to maintain openness to the input of others without sacrificing authority and surrendering to rampant individualism.
Conclusion. No one style of leadership will work in every situation, and very few individuals will find that they naturally fall into one category or another. But a sense of the range of possibilities, and an ability to understand the different values holding them up, maximizes a leader’s chances for success.
Key Takeaways
• A persona of leadership is the role adopted when leading an organization.
• There are a number of basic personas or leadership styles that may be mixed on an individual basis.
• Leadership styles are not good or bad in themselves, but some are more or less suited to certain individual personalities and specific kinds of businesses.
Exercise \(1\)
1. What are Goleman’s six leadership prototypes?
2. Are there any other leadership prototypes that could be added to Goleman’s list? Explain.
3. What is transformational leadership, and can you think of a kind of organization to which it might be well suited?
4. What is transactional leadership, and can you think of a kind of organization to which it might be well suited? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/09%3A_Manager's_Ethics-_Deciding_on_a_Corporate_Culture_and_Making_It_Work/9.05%3A_Styles_and_Values_of_Management.txt |
Culture on the Trading Floor
Source: Photo courtesy of Teresa Avellanosa, http://www.flickr.com/photos/49093093@N02/4649978754.
On Wall Street, S&T means sales and trades of stock, and it’s generally carried out by teams working for a bank or investment house. It’s their job to sniff out the best buys (and recommend them to their clients), while also picking up on which shares may be in for a fall so they can be unloaded fast.
On one of WallStreetOasis.com’s forum pages, welcome2nyc starts a thread this way: I was curious to know the culture of S&T. Can anyone give an honest opinion? welcome2nyc, March 20, 2010 (9:09 p.m.), “Culture on the Trading Floor…Changed?,” WallStreetOasis.com, accessed May 25, 2011, http://www.wallstreetoasis.com/forums/culture-on-the-trading-floorchanged.
Exercise \(1\)
1. What is a corporate culture?
2. A contributor named creditderivatives posts this about the culture at Deutsche Bank Equities: “These guys were brilliant and no-nonsense. Very tolerant atmosphere, but very focused. These guys argued over the correct pricing approach for equity swaps as opposed to which March Madness bound team had the best chance of winning it all.”
An “equity swap” is a complex financial bet, but in the end it comes down to this: one side believes a stock will go up (or down) more than another, and they put money on it.
• There’s not a lot of information here, but from what you have, can you brainstorm a short list of words fitting the culture and values Deutsche Bank fosters?
• One important characteristic of corporate culture is employee interaction: the way workers relate to each other on the job. At Deutsche Bank, does it sound like the culture values teamwork among workers, competition, or some mix? Explain.
3. BigFatPanda writes, “I’d rather work on a desk with the trash talk, like where people are on the verge of cutting each other.”
“A desk” is Wall Street talk for a team of analysts working together on investment strategies.
• How would you describe the culture BigFatPanda prefers?
• One of the recurring questions all managers face is “Will more and better work get done if people work together or compete with each other?” It’s pretty obvious where BigFatPanda comes down on this. From what he says and the way he says it, what do you suppose are some of the potential disadvantages of this organizational culture of competition?
4. jjc1122 writes, “When i used to work at the chicago mercantile exchange, there were a lot of crazy stuff. traders routinely doing coke in the bathroom, old irish guys hurling racial insults, fights, and sleeping with their hot female clerks.”
He adds that his experience dates from 2005, but he’d heard that things were actually a lot crazier in the earlier part of the decade.
• Two aspects of corporate culture are workplace mood (the social energy and decorum of an office) and leisure time (what coworkers do and the way they relate to each other when not at work). How has jjc1122’s manager tuned those aspects of the organization’s culture?
• One aspect of working culture involves life values—that is, the extent to which on-the-job experience leaks out to color nonwork concerns and life. What kinds of life values are exhibited by this organization? What kind of theoretical ethical argument could be made to criticize the manager’s promotion of these values?
• The two basic ways that an organizational culture is instilled are codes (established rules guiding an organization’s members) and social conditioning (guidance is provided by following the cues and examples of others in the organization). Do you suspect the values of jjc1122’s Chicago Mercantile Exchange workplace were established more by codes or social conditioning? Why?
• The instillation of a workplace culture through social conditioning functions in a variety of ways. Three are listed here. Can you fill in for each how it may have worked in the Chicago Mercantile Exchange in 2005?
1. Stories and myths embedded in daily conversations may indicate culturally appropriate conduct.
2. Heroes or stars in the organization may consistently communicate a common message about the organization’s guiding values.
3. The dress, speech, and physical work setting may be arranged to cohere with the organization’s values.
• One social way that an organizational culture may reinforce itself is through a self-selective process. What is a self-selective process? How might that process have worked to reinforce the values guiding work life at the Chicago Mercantile Exchange?
5. Bondarb writes, “When i am out with goldman people and somebody tells a joke they all look at the most senior GS person there to see if they are allowed to laugh.” GS is Goldman Sachs, the global investment bank.
• Make the case that employees constantly looking to superiors for guidance—even whether they should laugh at a joke—shows that a strong, clear corporate culture exists at Goldman.
• Make the case that employees constantly looking to superiors for guidance—even whether they should laugh at a joke—shows that a weak, ill-defined corporate culture exists at Goldman.
Corporate Culture at Herschend Family Entertainment
Source: Photo courtesy of Todd Baker, http://www.flickr.com/photos/technowannabe/1139227859.
Joel Manby is CEO of Herschend Family Entertainment, a \$300 million corporation employing more than 10,000 people at two dozen theme parks around the country. They put on everything from massive aquariums to Dollywood, the Dolly Parton theme park in Tennessee.
In an interview, Manby discusses the corporate culture infusing the properties. It’s composed of eight attributes:
1. Patience
2. Kindness
3. Honesty
4. Humility
5. Respectfulness
6. Selflessness
7. Forgiveness
8. Commitment
Manby exemplifies the corporate values he’s trying to instill this way, “You can dislike somebody, but you can still respect them, forgive them, and treat them with humility and honesty. We also have a phrase: ‘admonish in private, praise in public.’ So you don’t embarrass people.”
Manby explains that 50 percent of a Herschend executive’s year-end bonus is awarded on the basis of how well the organization’s culture is exhibited and promoted. As he puts it, “You have to put your money where your mouth is.”
He concludes with this: “It’s all about hiring the right people. You know, this culture either resonates with people or it doesn’t. If it doesn’t, they’re not going to enjoy working here.” Steve Tobak, Undercover Boss: Escaping GM’s Abusive Corporate Culture,” The Corner Office (blog), BNET, March 30, 2010, accessed May 25, 2011, blogs.bnet.com/ceo/?p=4254.
Exercise \(2\)
1. The characteristics of corporate culture elaborated in this chapter were the following. Corporate culture is
• shared,
• a provider of guidance,
• a provider of meaning in the organization,
• top heavy,
• a constellation of values,
• a dynamic constellation of values,
• organic,
• inclusive of life values.
Choose three of these characteristics and show how the culture Manby promotes at Herschend Family Entertainment relates with each one.
2. What is a corporate culture ethics audit? What does it attempt to measure?
3. If a corporate culture ethics audit were taken of this company, how do you suppose it would fare? Why?
4. Before coming to Herschend, Manby was CEO of Saab, a division of General Motors. His time there was marked by a very different organizational culture. According to him, “I don’t want to bash GM, but intimidation was part of the culture there. You would get ridiculed in meetings. The CEOs had big egos and had no problem making you look silly. I once missed one of my numbers. I didn’t miss it by that much, but the president of all of Saab calls me and orders me to fly over there [to Europe]. I get there Monday morning, he chews me out for four hours, and then I get on a plane and fly back. It was so humiliating, so uncalled for. I figured, if that’s the way I’m going to be treated, I don’t need that. That’s when I began looking at other opportunities.” Steve Tobak, Undercover Boss: Escaping GM’s Abusive Corporate Culture,” The Corner Office (blog), BNET, March 30, 2010, accessed May 25, 2011, blogs.bnet.com/ceo/?p=4254, brackets in the original.
Manby lists the attributes of the culture at Herschend—patience, kindness, honesty, and so on. What might a similar list look like for Saab?
5. Corporate culture provides an organization’s meaning; it defines what counts as success.
• For Herschend, what counts as success?
• For Saab, what counts as success?
6. A corporate culture distinguishes workers from people who work. What is the distinction?
• How does Herschend fit into this distinction?
• How does Saab fit into this distinction?
7. Manby says, “Apple’s culture, for example, would be very different from ours, but Steve Jobs is still an incredibly successful CEO. I’m not pretending we’re right and others are wrong; it’s just our culture, and it works for us.”
Explain how Manby can say that a set of ethical values isn’t right or wrong, but one set (at Saab) is wrong for him, and another set (at Herschend) is right for him?
Even Better Than the Real Thing
Source: Photo courtesy of Sandra Cohen-Rose and Colin Rose, http://www.flickr.com/photos/73416633@N00/1363267249/.
The web store FinerBags.com sells fakes—very good copies of purses originally made by Louis Vuitton and similar high-end brands. The price is right: a \$1,800 Prada bag can be purchased as a copy for about \$180. At Finer Bags, they’re totally open about what they’re doing, and their home page lists the advantages of buying their products. According to the leadership at Finer Bags, “Millions of replica handbags can be found on internet these days, they are not a rare thing anymore. Maybe the Louis Vuitton handbag that your friend bought is a perfect replica. Maybe the Louis Vuitton Monogram Speedy 30 that Linda paid \$1,200 for is a replica handbag. Maybe those replica bags all were bought from finerbags.com.” Business Ethics Workshop, accessed May 25, 2011, businessethicsworkshop.com/Chapter_9/finer_bags.html.
Exercise \(3\)
1. Would you call honesty part of the corporate culture at Finer Bags? Yes, no, or both? Explain.
2. Corporate cultural dissonance occurs when what actually happens on the ground doesn’t jibe with the principles supposedly controlling things from above. Do you suspect that dissonance is occurring here? Why or why not?
3. This company is selling counterfeit purses, bags designed to trick people into thinking they’re real when they’re not. No one denies that.
• Could you use a utilitarian argument (bring the greatest good and happiness to the greatest number) to justify this corporate culture and business endeavor as ethically respectable?
• Could you use either a basic duties argument (right and wrong is defined by preexisting principles) or Kant’s categorical imperative (to be right an act must be universalizable) to make the ethical case that this company should put itself out of business?
4. This line from the web page is curious: “Maybe the Louis Vuitton Monogram Speedy 30 that Linda paid \$1,200 for is a replica handbag.” It’s important to know that the price of the real thing is about \$1,200. The point being made is that people can end up paying full price for a copy. If that’s true, it sounds like Finer Bags is inviting people like you and me to realize that we can buy their fakes and then sell them as real, pocketing the difference.
• Imagine you buy a few replicas for \$120. Then you spread word around campus that your mom is a major department store buyer and handed off a few Louis Vuitton Monogram Speedy 30s that you’re now selling at the absurdly low price of…\$800. Can you sketch an argument to ethically justify your business model? What kind of ethical theory could it be based on? How would you respond to a consumer who discovered the trick?
• Imagine you have so much success that you hire some friends to go around selling bags at nearby colleges. Would you tell them the truth about the source of your bags or keep up the mommy lie? Why? What ethical justification could you sketch to support your decision?
• One reason to lie to the people you hire to sell the bags elsewhere is to help them do their job well. If they believe the bags are the real thing, they may find it much easier to enthusiastically promote their product. Is there any ethical difference between lying to employees to help them improve their work performance as purse salespeople and lying to consumers about what they’re getting when they make a purchase? If not, why not? If so, what’s the difference?
• Can you think of examples in the world where managers don’t tell their employees the whole truth about a situation and believe they’re doing the right thing? What is such a situation? Is it the right thing?
• Assume you’re running the fake purse outfit and hiring sales reps for other schools. You decide to maintain the lie about the purses’ origin. How do you think your small business would fare on a corporate culture ethics audit? Why?
5. Assume you’re running the fake purse outfit and hiring sales reps for other schools. You decide to reveal the truth about the purses’ origin to the reps. What you need to do next is instill a corporate culture that fosters lying. Common ways of instilling a workplace culture include the following:
• The founder’s ethical legacy to the organization may contribute to its living culture.
• Stories and myths embedded in daily conversations may indicate culturally appropriate conduct.
• Heroes or stars in the organization may consistently communicate a common message about the organization’s guiding values.
• The dress, speech, and physical work setting may be arranged to cohere with the organization’s values.
• An organizational culture may reinforce itself through self-selective processes.
How might these or other strategies of social conditioning be used to create a working culture that values lying?
6. If you discuss this case in class, there’ll be people loudly proclaiming that this fake bag business is despicable and completely wrong. Then they’ll go home, hit up finerbags.com on the Internet, and spend the next hour trying to figure out if they can make the scheme work on your campus. It is good money. Now, is there any ethical difference between someone who lies in a social situation like a class and someone who lies as a way of doing business?
"I Created Studio 54!"
Source: Photo courtesy of Carl Johan Crafoord, http://www.flickr.com/photos/carl-johan/53185001.
Not all leadership jobs are exercised from on top of a pyramid, with the president on the highest level, vice presidents below, then directors beneath them, and so on. Take the case of Carmen D’Alessio. “I created Studio 54!” she proclaims, even though she didn’t own any part of the club or have any official role in the way it was run. Still, according to her, if you want to find out about the once-thriving business, “I’m the most important person to talk to.” Jada Yuan, “As the Disco Ball Turns,” New York, April 30, 2007, accessed May 25, 2011, http://nymag.com/news/features/31277.
In the 1980s, Studio 54 was the New York City club. It began, according to D’Alessio, soon after she dined with two men—Ian Schrager and Steve Rubell—who owned a club in Queens, New York, an area not considered particularly trendy. She thought that Rubell possibly had some raw night-clubbing talent, so she encouraged him to bring his skills to hipper Manhattan.
To generate buzz before Studio 54 actually opened, she dressed Schrager and Rubell in Armani suits and threw a dinner in their honor attended by celebrated artist Andy Warhol, clothing designers Halston and Calvin Klein, and a host of similarly bright luminaries. Then, on the club’s first night, they went for an outlandish theme bash: 1001 Nights with elephants, camels, tents, men wearing turbans, belly dancers, and everything else packed onto the disco floor. Soon after the remarkable event, a widely distributed magazine at the time, Newsweek, put Studio 54 on their cover.
The parties D’Alessio threw were as outrageous and scandalous as the guests who turned up. One night Bianca Jagger (ex of Mick) rode in on a white horse; on another the designer Valentino got to act as the ringleader of real circus animals. Armani was feted with a drag-queen ballet. The bartenders were young, male, built, and shirtless. The busboys doubled as entertainers: dressed in tight little white shorts, bowties, and nothing else, they were given illicit drugs and a small paycheck and told to pick up glasses and party with the guests, who included fashion designers, artists, and unique people like Johannes von Thurn und Taxis, a flaming and wealthy European aristocrat whose wife was thirty years younger and so explosive that people called her Princess TNT. Malcolm Forbes, the hard-nosed American businessman, was a regular too. Everyone was welcome, as long as they were interesting.
In talking about it now, Carmen D’Alessio gives credit to the others, but never lets anyone forget what Andy Warhol said about Studio 54’s more visible leaders, Ian Schrager and Steve Rubell: “Carmen brought, hand in hand, Ian and Steve to the Big Apple.”
Exercise \(4\)
1. The line outside Studio 54 was infamous. People stretched around the block and waited hours to get in. Some waited all night and never reached the door. One reason things went so slowly for many is that D’Alessio enjoyed swooping out of the club, running down the line, and hand picking people to jump ahead and go straight in.
• Andy Warhol said this about D’Alessio: “She has gone everywhere from Rome to Rio. Anywhere there is a party and until the party lasts, she’ll be there, because she has a list of the rich, the beautiful and the young.” Steve Lewis, “Good Night Mr. Lewis: Carmen D’Alessio’s Fabulous Life,” blackbookmag.com, December 11, 2008, accessed May 25, 2011, www.blackbookmag.com/article/good-night-mr-lewis-carmen-dalessios-fabulous-life-part-two/5463. Can you make a good guess about the kind of people that D’Alessio chose for quick entry?
• Essentially, D’Alessio chose some clients for better service than others. Justify this management strategy ethically.
• Another entertainment company with lines is Herschend, the parent corporation of many Disneyland-like theme parks around the country. The lines there—waiting to get on the roller coaster, to buy popcorn, to go to the bathroom—are first come, first served. The values Herschend uses to define its culture (patience, kindness, honesty, humility, respectfulness, selflessness, forgiveness, commitment) fit well with the egalitarian treatment. If you were in charge at Studio 54, what kind of values could you array to help employees and others understand why the line outside the bar moved so unevenly?
2. Studio 54 was a big-time vice den. Upstairs in the shadowy balcony people regularly coupled. Drugs were as common as beer. (A large glittery moon with a face and arms hung from the ceiling. It was snorting cocaine.) Management knew about all this and encouraged it.
• With a focus on the facts that D’Alessio and company generally hired young, attractive, and muscular men, asked them to work with almost no clothes, and fed them drugs to brighten their attitudes, how would you characterize management’s culture with respect to employees? Were they valued as mercenaries, as something closer to members of a family, as something else? (Remember, guys lined up to apply for these coveted posts.)
• How would you describe the Studio 54 attitude toward its consumers? Were they valued as people to be fleeced of their money, as participants in a shared project? Something else? Why do you think that?
3. Though not a lot of clothing was worn by frontline employees, this doesn’t change the fact that there was a very strict dress code at Studio 54.
• In ethical terms, is there any difference between requiring guys to wear almost nothing while they hustle around the bar delivering drinks and, in a different business, requiring guys to wear neat, stiff uniforms while they hustle around a neighborhood delivering Domino’s pizzas? If there is a difference, what is it? If not, why not?
• Unlike Domino’s, Studio 54 had a semiofficial body requirement for employees: the guys needed to be beefy and fit. In thinking about the management decision to impose both dress codes and body requirements, how are these two demands similar and how are they different? Is one less ethically problematic than another? Why or why not?
• What are some ethical justifications an owner could cite for enforcing a dress code in general, regardless of whether it’s a near-nude barboy or a Domino’s driver? How would those arguments apply in the specific case of Studio 54?
4. Carmen D’Alessio was behind the scenes at Studio 54, throwing the parties, arranging people, setting the tone of the place. With respect to Daniel Goleman’s six basic leadership personas listed below, which ones do you suspect correspond with D’Alessio, and which don’t fit her so well? Why?
• Visionary
• Coach
• Affiliative
• Democratic
• Pacesetter
• Commander
5. What is transformational leadership? What is transactional leadership? Does D’Alessio share characteristics with one or both? How?
6. Part of the reason for naming a leadership style a leadership persona is to underline the idea that being a leader can be like donning a mask: you can be whatever you choose when you stand in front of others and direct. Besides being a leader at Studio 54, D’Alessio was also a massive partier. How is adopting a personality for leading an organization like adopting a style to exhibit when you go out with friends on the weekend?
• Is there anything ethically wrong with adopting a mask for your public self? Is so, what? If not, why not? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/09%3A_Manager's_Ethics-_Deciding_on_a_Corporate_Culture_and_Making_It_Work/9.06%3A_Case_Studies.txt |
Chapter 10 examines issues and ethics surrounding discrimination in the workplace.
10: The Tense Office- Discrimination Victimization and Affirmative Action
Learning Objectives
1. Define racial discrimination.
2. Distinguish different ways that racial discrimination occurs in the workplace.
3. Consider legal aspects of racial discrimination in a business environment.
4. Discuss ethical aspects of racial discrimination in a business environment.
The White Running Back
Toby Gerhart is a bruising running back. Coming out of college at six feet and 225 pounds, he was drafted by the Minnesota Vikings football team with their first-round pick in 2010. It was a controversial choice. His playing style is unorthodox: he runs standing almost straight up and doesn’t do much faking and cutting. Most NFL runners get low and slip away from tacklers. Gerhart chugs and blows through things.
That’s not Gerhart’s only distinction. In a league where running backs—almost all of them—are black, he’s white. On the days leading to the draft, Gerhart feared his skin color might be expensive. An anonymous quote had been circulating, suggesting that his position in the draft order could fall, bringing his paycheck down along with it: “One longtime NFL scout insisted that Gerhart’s skin color will likely prevent him from being drafted in Thursday’s first round. ‘He’ll be a great second-round pickup for somebody, but I guarantee you if he was the exact same guy—but he was black—he’d go in the first round for sure,’ the scout said.” Michael Silver, “Race Factors into Evaluation of Gerhart,” Yahoo! Sports, April 20, 2011, accessed May 31, 2011, sports.yahoo.com/nfl/news?slug=ms-gerhartstereotype042010.
As it turned out, the scout was wrong. But the question of race in sports had flared, and the media came to it. One story appeared on an MSNBC-affiliated website called theGrio.com. Writer John Mitchell pointed out that twenty-seven of the NFL’s thirty-two general managers (those ultimately responsible for draft-day selections) were white, and so, he asserted, it was “virtually impossible” that racism could work against Gerhart. John Mitchell, “White Running Back’s Draft Status Won’t Be Hamstrung by Race,” TheGrio.com, April 22, 2010, accessed May 31, 2011, www.thegrio.com/opinion/white-running-backs-draft-status-wont-be-hamstrung-by-race.php.
John Mitchell is black. In fact, if you go to theGrio.com’s contributor page, you’ll find that, as a rough estimate, 90 percent of the website’s writers are black, a number that’s far, far out of proportion with the global percentage of black writers out there. The disproportion, however, would be less surprising for anyone who’d read the description the site presents of itself: “TheGrio.com is devoted to providing African Americans with stories and perspectives that appeal to them but are underrepresented in existing national news outlets. TheGrio features aggregated and original video packages, news articles, and blogs on topics from breaking news, politics, health, business, and entertainment, which concern its niche audience.” “About theGrio,” TheGrio.com, accessed May 31, 2011, www.thegrio.com/about.
On that same page, surfers are directed to a video story about theGrio.com produced by NBC New York, which is a station aimed at the general market, not theGrio.com’s niche audience. The story tells of theGrio.com’s origin, and in an interview with the website’s founder, he remarks that his contributors are very diverse: “We have conservatives, liberals, old folks, young folks, rich folks, poor folks, politicians and plain folks.” “About theGrio,” TheGrio.com, accessed May 31, 2011, www.thegrio.com/about.
The NBC story also informs us that the idea for creating a site that aggregated news stories involving the black community was taken to NBC executives who agreed to sponsor the website. We don’t learn which specific NBC execs received the proposal, but a quick check of the network’s directors and programming directors and so on leads to the strong suspicion that most were white.
Questions about racial discrimination are tangled and difficult. Here are a few of the knotted uncertainties arising from the Gerhart episode and its treatment in the press:
• The story about Toby Gerhart in theGrio.com claimed that the white Gerhart couldn’t suffer racial discrimination because the people who’d be drafting him (or not) were white. Is that true, is it impossible for whites to be racists against other whites?
• Overwhelmingly, running backs in the NFL are black. These are painful but very high-paying jobs with long vacations and lots of fringe benefits. Most young guys would be happy with the work, but a certain racial group holds a near monopoly. Is there racism operating here?
• TheGrio.com’s workforce is, according to its founder, very diverse in many ways but completely dominated by a single racial group. Racism?
• MSNBC, which sponsors theGrio.com, currently has a prime-time TV lineup (Joe Scarborough and Mika Brzezinski in the morning and Chris Matthews, Ed Schultz, Rachel Maddow, and Lawrence O’Donnell at night) that’s all white. Racism?
What Exactly Is Racial Discrimination?
Racial discrimination in the economic world can be defined in three steps:
1. An employment decision—hiring, promoting, demoting, firing, and related actions—affects an employee or applicant adversely or positively.
2. The decision is based on the person’s membership in a certain racial group rather than individual ability and accomplishment with respect to work-related tasks.
3. The decision rests on unverified or unreasonable stereotypes or generalizations about members of that racial group.
The first step—someone has to suffer or benefit from the discrimination—is important because without that, without something tangible to point at, you’re left making an accusation without evidence.
The second step—discrimination is based on race as opposed to job qualifications—is critical because it separates the kind of racism we typically consider vile from the one we normally accept as reasonable. For example, if actors are being hired to play Toby Gerhart in a biography about his life, and all the finalists for the role are white guys, well, the casting company probably did discriminate in terms of race, but this particular discrimination overlaps with qualifications helping the actor play the part. This contrasts with the alleged racial discrimination surrounding the Gerhart draft pick: the suspicion that he couldn’t be very good at running over other people with an oblong leather ball cradled in his arm because his skin is white. If that’s a baseless premise, then it follows that within this definition of racism, theGrio.com’s claim that Gerhart has no reason to fear unfair discrimination because so many NFL general managers are white is, in fact, wrong. Whites can exhibit racial discrimination against other whites just as blacks can discriminate against blacks and so on.
The difference between discriminating in favor of white males to play Gerhart in a movie and discriminating against white males as running backs is more or less clear. Between the extremes, however, there are a lot of gray areas. What about the case of hiring at theGrio.com? Just looking at the list of contributors, it’s hard to avoid wondering whether they’re picking people based on skin color as opposed to writing ability. On the other hand, since theGrio.com explicitly states that its mission is to tell stories affecting the black community, a case could be made that black writers are more likely to be well qualified since it’s more likely that their lives significantly connect with that community. It’s not, in other words, that contributors are hired because they’re black; it’s the fact that they’re black that helps them possess the kind of background information that will help them write for theGrio.com.
The definition’s third step—an employment decision rests on unverified or unreasonable stereotypes or generalizations about members of a racial group—is also important. Staying on theGrio.com example, there’s a difference between finding that in specific cases contributors well suited to the site also tend to be black, and making the stronger generalization that whites, Asians, Hispanics, and so on are by nature incapable of understanding and connecting with the realities covered by the web page. This second and generalizing claim eliminates the opportunity for those others to participate.
Finally, questions about racial discrimination center on purely racial divisions but overlap with another distinction that can be similar but remains technically different: ethnicity.
Race concerns descent and heredity. It’s usually visible in ways including skin, hair, and eye color. Because it’s a biological trait, people can’t change their race. Ethnicity is the cluster of racial, linguistic, and cultural traits that define a person as a member of a larger community. The Hispanic ethnic group, for example, contains multiple races, but is unified by common bonds tracing back to Spanish and Portuguese languages and customs. Though it’s not common, one’s ethnicity may change. A girl born in Dublin to Irish parents but adopted by an Argentine family living in East Los Angeles may ultimately consider herself Hispanic.
The US Census Bureau divides individuals in terms of race and, with a separate question, ethnicity. It’s not unusual, however, for the two categories to be mixed in a business environment. Many organizations place Hispanic on the list of racial options when measuring their workforce’s diversity. In the real world, the line between race and ethnicity is blurry.
Locating Racism in Business
Questions about racism swirl around the Toby Gerhart episode, but it’s equally clear that getting a firm grip on which people and institutions involved actually are racist is difficult. Nearly all running backs in the NFL are black, and at least one scout presumes that racial discrimination in favor of that color is an active part of the reason. But there could also be social and cultural reasons for the imbalance. Maybe young black men are more likely to devote themselves to football because they see so many successful role models. Or it may be that players—regardless of their race—come from a certain economic class or geographic part of the country where, in fact, blacks happen to be the majority. More explanations could be added. No one knows for sure which is right.
On the other side, just as it’s prudent to be careful when using words like racist and pointing fingers, there is real evidence indicating wide and deep currents of racism in US business life. Generally, there are three evidence types:
1. Experimental
2. Statistical
3. Episodic
One experimental indication of racism in hiring comes from economist Marc Bendick. He paired applicants for gender and appearance, loaded them with similar qualifications, and sent them to New York City restaurants in search of waiter jobs. The only notable difference between the two applicants was their race; whites, blacks, Asians, and Hispanics participated. After 181 restaurant visits in which the two applicants appeared within an hour of each other, the results were tabulated. Because four racial groups were investigated there are a lot of cross-tabs, but the basic finding was simple: with everything else as equal as possible, whites were significantly more likely to be given information about job duties, receive second interviews, and be hired. According to Bendick, “The important thing is that we repeated the experiment dozens of times so that we can be pretty sure when a pattern emerges it really is differences in employer behavior and not a random effect.” “City Room,” New York Times, NY/Region, March 31, 2009, accessed May 31, 2011, cityroom.blogs.nytimes.com/2009/03/31/racial-bias-seen-in-hiring-of-waiters.
In terms of statistical evidence of racism, racial disparities are significant in many areas. Income is not atypical. According to the US Census Bureau, in 2006 the median personal income for Asians was \$36,000; for whites \$33,000; for blacks \$27,000; and for Hispanics \$24,000.U.S. Census, “Table PINC-03. Educational Attainment—People 25 Years Old and Over, by Total Money Earnings in 2005, Work Experience in 2005, Age, Race, Hispanic Origin and Sex,” in Current Population Survey (2006). The disparities contract significantly—but not all the way—when you adjust for education levels. Surveying only those who hold bachelor’s degrees yields these numbers: white, \$44,000; Asian \$42,000; black \$42,000; Hispanic \$37,000. Going back a little more than a decade, the federal Glass Ceiling Commission produced a set of striking statistics. According to its study, 97 percent of the senior managers of Fortune 500 companies are white (and 95 percent are male). That compares with a broader economic reality in which 57 percent of the working population is female, or minority, or both. George E. Curry, “Race, Gender and Corporate America,” District Chronicles, April 24, 2005, accessed May 31, 2011, www.georgecurry.com/columns/race-gender-and-corporate-america.
Episodic evidence of racism in business life is real-world episodes where decisions seem to have been made based on racial distinctions. The venerable clothier Abercrombie & Fitch, which once outfitted JFK and now sells heavily to collegians, garnered considerable (and unwanted) media attention when Jennifer Lu, a former salesperson at the store, took her story to the CBS news program 60 Minutes. According to Lu, she was fired soon after corporate executives patrolled the store where she worked and informed the store’s manager that the staff was supposed to look like the models in the store’s display posters. If you’ve been in Abercrombie, you may remember that they tend to have the blonde, blue-eyed, football team captain look. Like Toby Gerhart. In an interview with 60 Minutes, Anthony Ocampo says, “The greeters and the people that worked in the in-season clothing, most of them, if not all of them, were white. The people that worked in the stock room, where nobody sees them, were mostly Asian-American, Filipino, Mexican, Latino.” Rebecca Leung, “The Look of Abercrombie & Fitch,” 60 Minutes, November 24, 2004, accessed May 31, 2011, www.cbsnews.com/stories/2003/12/05/60minutes/main587099.shtml.
A lawsuit against the store was settled out of court when Abercrombie agreed to pay almost \$50 million to negatively affected employees and beef up their minority hiring. They also stated that their custom of seeking out new sales staff at predominantly white fraternities and sororities should be modified.
Categories of Racial Discrimination
When discrimination exists in a business environment, it can be distinguished into several categories. First, there’s a division between institutional and individual discrimination. Institutional discrimination is exemplified in the Abercrombie lawsuit. The preference given to white, football-player types wasn’t one person at one store; it was part of the corporate culture. Managers were instructed to include a certain look while excluding others, and presumably their job depended on their ability to meet that demand. The manager, in other words, who fired Jennifer Lu may (or may not) have thought it was a terrible thing to do. Regardless, the manager’s personal feelings had nothing to do with the firing. Instructions were provided by higher-ups, and they were followed.
Individual racial discrimination, on the other hand, can occur in any organization no matter how determined leaders may be to create an organizational culture prohibiting it. The NFL, for example, established a requirement (commonly called “the Rooney Rule”) in 2003 requiring teams to interview minority candidates for football operations posts. It’s part of a broader effort by the league to ensure against racial discrimination. Still, this comes from a 2005 article by Sports Illustrated writer Dan Banks: “One Asian stereotype concerns size. A NFL personnel man told me on Thursday the problem with Chang is ‘the kid is short.’ But when I noted that Chang was 6-1½ and 211 pounds, and taller than San Diego’s Drew Brees—the talent scout replied: ‘But he plays short. And he’s 211, but he looks frail.’” Don Banks, “Hurdles to History: From Size, Stereotypes, System, Chang Fights Skeptics,” Inside the NFL (blog), Sports Illustrated, April 15, 2005, accessed May 31, 2011, sportsillustrated.cnn.com/2005/writers/don_banks/04/15/chang/index.html.
A second broad distinction within the category of racial discrimination divides isolated from regularized incidents. An isolated case of racial discrimination is a one-time deal. Regularized incidents are repeated occurrences fitting into a pattern.
The final distinction cuts through all those mentioned so far; it divides unintentional from intentional discrimination. Take as a general example a seventy-year-old who grew up in a time and place where racism was normal and accepted almost without objection. For someone coming from those circumstances, it’s hard to imagine that from time to time some of that old way of seeing the world isn’t going to slip through. Of course the fact that racism is unintentional doesn’t make it less racist, but just like in everything else, there’s a difference between doing something without thinking about it and doing something with premeditation and full understanding.
The Legal Side of Discrimination
A complex web of legal precedents and civil rules apply to racial discrimination. At the center, the Civil Rights Act of 1964 covers all employers in both private and public organizations that have fifteen or more workers. The act’s crucial language can be found in Title VII, which confronts a host of discriminatory practices:
It shall be an unlawful employment practice for an employer (1) to fail or refuse to hire or to discharge any individual, or otherwise discriminate against any individual with respect to his compensation, terms, conditions or privileges of employment, because of such individual’s race, color, religion, sex, or national origin; or (2) to limit, segregate or classify his employees or applicants for employment in any way that would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s race, color, religion, sex, or national origin. Civil Rights Act of 1964 (Pub. L. 88-352, 78 Stat. 241, enacted July 2, 1964).
You notice that employee is referred to as “his,” not “his or hers,” and employers are also “his,” not “his or hers.” That’s not a snarky comment; it’s just an example of how treacherous the issues of unfair discrimination are. Even those with the best intentions find it difficult to pull completely away from what others may perceive as signs and appearances of unfair practices.
The difficulty partially explains why the Civil Rights Act has been repeatedly modified and supplemented. The Equal Employment Opportunity Act of 1972 set down new rules and created a powerful commission to enforce and report on the status of antidiscriminatory efforts across the nation. These reports have played a role in many civil lawsuits brought by individuals or groups against employers suspected of discriminatory treatment.
Additional requirements—some involving affirmative action (to be discussed further on)—were compiled for companies doing business with the US government. While these measures don’t bind organizations operating independently of government contracts, the pure size and spending power of Washington, DC, does send the measures far into the world of business.
So the legal and governmental bulwark set up against racial and other types of discrimination stands on four legs:
1. Racial and similar types of discrimination are directly illegal.
2. Civil lawsuits may be filed by those who feel they’ve suffered from discriminatory practices.
3. Government oversight (the Equal Employment Opportunity Commission) is continuous.
4. Government regulations insist that companies wanting to do business with deep-pocketed Washington, DC, implement exemplary antidiscriminatory practices.
The Ethics of Discrimination: Arguments against the Practice
It’s difficult to locate a mainstream ethical theory for workplace life that can be twisted to support racial discrimination as it’s defined in this chapter. The arguments mounted against it generally fall into three groups:
1. Fairness arguments typically operate from the assertion that discrimination divides up society’s opportunities in an unacceptable way. (These kinds of arguments are sometimes called “justice arguments.”)
2. Rights arguments typically assert that discrimination contradicts the victims’ basic human rights.
3. Utilitarianism arguments employed in the economic world frequently assert that discrimination reduces a society’s economic productivity and so harms the general welfare, the happiness of the society.
Fairness, as Aristotle defined the term, is to treat equals equally and unequals unequally. People, that means, are to be treated differently if and only if there are job-pertinent differences between them. Burly men should be favored over thin ones when you’re hiring an offensive lineman in the NFL, but not when you’re looking to contract a coach.
The philosopher John Rawls advocated an ingenious way to, at least as a thought experiment, promote fairness. He proposed that individuals imagine the reality surrounding them as shaken up, with people pulled from their situation and randomly inserted into another. So if you’re a white guy in college looking for a summer job, you probably don’t mind too much that Abercrombie & Fitch is looking for your type more than any other. But if you imagine getting shaken up with your black, Asian, and Hispanic classmates and you don’t know beforehand what race you’re going to get assigned, then maybe you think twice about whether Abercrombie should be allowed to hire whites so pervasively. This is called a veil of ignorance test: you need to imagine how you’d like society to be if you don’t know beforehand exactly where you’ll be placed in it. The imagined reality, presumably, will be one where everyone gets a chance that’s fair.
Rights arguments against discrimination typically depart from the premise that as humans we’re all endowed with a certain dignity and freedom that abides regardless of circumstances. These attributes are an essential part of what we are: they’re like pregnancy in the sense that you can’t have them halfway. You’re either pregnant or you’re not; you either possess full dignity and freedom just like everyone else or you don’t. If all of us do possess dignity and freedom, then it’s a short step to see that discrimination is an affront to them. Treating one group differently than another is to wrongly claim that they have different levels of basic dignity. Or, from the viewpoint of freedom, discrimination grants one group more freedom in the world than another. Again, the argument here is that dignity and freedom can’t be measured or parceled out; as essential rights, everyone must hold them perfectly, and they must be respected fully.
The utilitarian argument holds that we ought to act in the business world in a way that maximizes our collective happiness and welfare. If that’s right, then we all have an interest in ensuring that the most qualified people occupy the various working slots in our economy. Possibly the examples of professional football and Abercrombie don’t lend themselves very well to this argument, but if we move to other professions, the inadvisability of discrimination becomes clearer. In the field of medical research, we wouldn’t want to lose a breakthrough because the one person who’d have the idea that could cure cancer happens to be Hispanic. The argument, therefore, is simply that as a society we benefit when each individual member is allowed the maximum opportunity to contribute.
The Ethics of Discrimination: Racism versus Job Qualification
While few argue that discrimination is good or justified, there are equally few who deny that some situations do, in fact, allow for discrimination (the actor hired to play Martin Luther King is black, the person hired to monitor the women’s locker room is a woman). Between these extremes there stretches a tense set of debates about where the line gets drawn. When is some limited discrimination acceptable?
The lawsuit against Abercrombie & Fitch alleging that the company hires a disproportionately white sales force and favors white employees for the best positions never went to court. Former employee Jennifer Lu turned up on 60 Minutes, CBS news started running stories about how Asians and Mexicans were confined to the stockroom, and with the bad publicity storming, Abercrombie opted to settle the matter and move on. That was probably a good business decision.
Others, however, wanted to push the issue out to see the ethical consequences. One of those was lawyer and talk show host Larry Elder. He made this point: “Abercrombie & Fitch ought to have the right to set their own policies. Look, there’s a restaurant called Hooters. Hooters requires you to have certain kinds of physical accoutrements, and I think people understand that. Should they have a right to hire waitresses because they want to attract a certain kind of clientele who want to ogle at the waitresses? I think so.” Rebecca Leung, “The Look of Abercrombie & Fitch,” 60 Minutes, November 24, 2004, accessed May 31, 2011, www.cbsnews.com/stories/2003/12/05/60minutes/main587099.shtml.
Closing off the argument with respect to Abercrombie & Fitch, the point is that Abercrombie isn’t selling only clothes but also a look, an image, a kind of social message. And that message is crystallized by the kind of people they hire to walk around their showrooms and smile at consumers: white, attractive, fit, upper-middle-class. Not coincidentally, one of the company’s subsidiary lines of clothes is called Prep School. And if that’s what they’re selling—not just clothes but a social message—they should be able to hire the best possible messengers, just as Hooters is allowed to hire the kind of waitresses their clientele wants to ogle and just as the movie producer is allowed to hire a black actor to play Martin Luther King. There’s no racial discrimination here; it’s just business. At bottom, it’s no different from theGrio.com, which is selling a specific product and image that naturally leads to an almost entirely black organization. In every case, it’s not that the business starts out with a certain racial (or gender) type that they’ll contract; it’s that they start out with something they want to sell, and as it happens a certain racial type lends itself to the business.
There are two types of responses to this argument. The first is to push back against the premise that the one racial type really does serve the business’s interest better than the others. Rebecca Leung, the CBS reporter for the Abercrombie & Fitch case, shapes her story this way. The idea, Leung asserts, of prep schools and the all-American pursuit of upper-middle-class life that Abercrombie tries to represent belongs equally to all races. There’s no justification, Leung leads viewers to believe, for associating that ideal with a skin color. That’s why her report ends this way:
“All-American does not mean all-white,” says Lu.
“An all-American look is every shade,” Lueng asks.
“Yes, absolutely.” Rebecca Leung, “The Look of Abercrombie & Fitch,” 60 Minutes, November 24, 2004, accessed May 31, 2011, www.cbsnews.com/stories/2003/12/05/60minutes/main587099.shtml.
The other kind of response to the argument that Abercrombie’s business model lends itself to hiring whites is to concede the point but then to insist that it doesn’t matter. Because society’s general welfare depends on rallying against poisonous discrimination, it should be avoided in every possible case, even those where there might be some rational, business-based reason for engaging in the practice. Abercrombie, the argument goes, may have good reason for seeking out white sales staff. But even so, the larger social goal of developing a color-blind society requires Abercrombie’s participation, and the company ought to be required to participate even against its own short-term economic interest.
Conclusion
For historical reasons in the United States, discrimination in the reproachable sense of the word comes into sharpest focus on questions concerning race. Any distinguishing characteristic, however, can be levered into a scene of unfair marginalization. Women, for example, have suffered mistreatment in ways analogous to the kind discussed here for racial groups. And it doesn’t stop there. Age, national origin, religion, weight, whatever, all of us have features that can be singled out by others and then converted into favoritism or negative prejudice in the workplace. Somewhere there’s probably a high executive who’s convinced that individuals with knobby knees can’t do good work. In ethical terms, all these cases may be understood and handled as the question of race has. That is, by thoughtfully determining whether the identifying feature—the skin color, gender, age, religion, weight, the knobbiness of the knees—actually has a bearing on the person’s ability to successfully accomplish the tasks fitting the job.
Key Takeaways
• Racial discrimination is adverse treatment stemming from unfounded stereotypes about a person’s race.
• Favoring or disfavoring members of a racial group may imply racism, or it may reflect a legitimate job requirement.
• Evidence of racial discrimination may be accumulated experimentally, statistically, and episodically.
• Racial discrimination in business can be divided into multiple kinds and intentions.
• The Civil Rights Act of 1964 is a key legal document in the history of discrimination.
• Ethical arguments against discrimination are generally built on theories of fairness, rights, and utilitarian arguments.
Exercise \(1\)
1. In your own words, what are the three steps defining racial discrimination?
2. What’s the difference between racial discrimination and a preference for race based on an occupational qualification? Provide an example.
3. List and define the six categories of discrimination in a business environment.
4. What are the main legal and governmental remedies set up against discrimination?
5. Why kind of business may favor Asians when hiring, and draw both reasonable defenses and criticisms of the practice?
6. What is the utilitarian argument against racism in the economic world? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/10%3A_The_Tense_Office-_Discrimination_Victimization_and_Affirmative_Action/10.01%3A_Racial_Discrimination.txt |
Learning Objectives
1. Define gender discrimination.
2. Consider the ethics of occupational segregation.
3. Discuss the doctrine of comparable worth.
4. Define the glass ceiling.
5. Examine the case of motherhood.
10.03: Discrimination- Inferiority versus Aptness
Discrimination in the workplace moves in two directions. One is hierarchical, one group or another is stereotyped as simply superior or inferior. Historically, many cases of race discrimination fit on this scale. Discrimination can also move horizontally, however. In this case, divisions are drawn between different groups not so much in terms of general capability, but as naturally suited for some and naturally unsuited for other tasks and occupations. Gender discrimination frequently fits into this category.
Here’s a list of professions where the workers are more than 90 percent women:
• Dental hygienists
• Preschool and kindergarten teachers
• Secretaries and administrative assistants
• Dental assistants
• Speech-language pathologists
• Nurses
• Child-care workers
• Hairstylists and cosmetologists
• Receptionists and information clerks
• Payroll clerks
And another where the workers are 99 percent (not a typo) male:
• Logging workers
• Automotive body repairers
• Cement masons
• Bus and truck mechanics
• Electrical power-line installers and repairers
• Tool and die makers
• Roofers
• Heavy vehicle equipment service technicians
• Home appliance repairers
• Crane and tower operators
The lists come from a blog called The Digerati Life. Silicon Valley Blogger, “Traditional Jobs for Men and Women and the Gender Divide,” The Digerati Life (blog), May 29, 2007, accessed May 27, 2011, http://www.thedigeratilife.com/blog/index.php/2007/05/29/traditional-jobs-for-men-and-women-the-gender-divide. The author is a software engineer living in Silicon Valley. Because she’s a she, 78 percent of her colleagues don’t use the same bathroom. Claire Cain Miller, “Out of the Loop in Silicon Valley,” New York Times, April 17, 2010, accessed May 31, 2011, http://www.nytimes.com/2010/04/18/technology/18women.html?pagewanted=1.
What Exactly Is Gender Discrimination?
Gender discrimination defines analogously with the racial version:
1. An employment decision—hiring, promoting, demoting, firing—adversely or positively affects an employee or applicant
2. The decision is based on the person’s gender rather than individual merit.
3. The decision rests on unverified stereotypes or generalizations about members of that gender.
The difference, again, is that the stereotypes and generalizations tending to surround women in the United States during our lifetimes have branded the group as naturally suited to some types of work and not others; and, correspondingly, men also find their natural roles pointing in some directions and not others. This division of labor raises provocative questions. More sparks fly when two other factors add to the mix: concrete and broad statistics showing that women receive lower wages than men when doing distinct but comparable work; and women who do pursue career lines dominated by men can find their advance up the promotion ladder halted by a difficult-to-see barrier, a kind of glass ceiling.
So three ethical issues connecting with gender discrimination in the workplace are occupational segregation, comparable worth, and the glass ceiling.
Occupational Segregation: The Causes
What causes occupational segregation? One explanation is biological. Differences, the reasoning goes, that are plainly visible physically also exist on the level of desires and aspirations. Women and men are simply divergent; they pursue distinct goals, define happiness in separate ways, and tend to have dissimilar kinds of abilities. For all those reasons, women gravitate to different kinds of professions. Now, if all those things are true, then we should expect to see just what we do see: significant occupational segregation.
The biological explanation also functions less directly when career paths and family paths conflict. Women who physically carry children find themselves removed—willingly or not—from work for significant periods. If you see that coming in your not-distant future, then you may opt into a field where that kind of absence is less damaging to the company and your own long-term prospects.
One clean argument against the biological explanation for gender segregation in the workforce starts with the suspicion that visible physical differences may be leading us to mistakenly believe that there are underlying psychological differences where few actually exist. People, the reasoning goes, are making an invalid argument when they suppose that because women and men look different on the outside, they must be different on the inside too. There’s no reason that’s necessarily true, just like there’s no reason to think that a Cadillac painted blue and one painted pink are going to perform differently on the road.
A second and frequently cited explanation for occupational segregation is social precedent. Young men and women making career decisions normally have very limited experience in the workplace and so depend on what others have done. It’s very reasonable, therefore, for a young man trying to decide between, say, going to work as an assistant to a dentist and going to assist a roofer to notice that a lot of other guys are working on roofs, but not many are in dentists’ offices. Women see the same thing, and the occupational segregation that already exists in society gets repeated. In this case, it’s the individual men and women themselves who are effectively volunteering for professional separation.
A third explanation—and the one drawing the sharpest ethical attention—is discriminatory prejudice. Those in charge of hiring stack the deck to favor one gender over another because of unverified generalizations about differences between men and women. In his book Business Ethics, Manual Velasquez relates an experiment done by the ABC news program Primetime Live. Two early careerists—Chris and Julie—were outfitted with hidden microphones and tiny cameras and sent out to answer the same help-wanted ads. Their experiences were for TV entertainment, not a scientific study, but they do illustrate how discriminatory occupational segregation can work. Manuel Velasquez, Manual Business Ethics: Concepts and Cases (New Jersey: Prentice Hall, 2002), 306.
Both she and he were in their midtwenties, blond, and attractive. They presented virtually identical résumés, and both claimed to have management experience. What they got from their interviewers, however, was very different. When Julie appeared at one company, the recruiter spoke only of a position answering phones. The same day the same recruiter offered Chris a management job. In a gotcha-follow-up interview, the flustered recruiter told the camera that he’d never want a man answering his phone.
Another instance wasn’t quite so clear-cut. The two visited a lawn-care company. Julie received a typing test, some casual questions about her fiancé, and was offered a job as a receptionist. Chris’s interview included an aptitude test, some casual talk about keeping the waistline trim, and a job offer as a territory manager. When confronted in his gotcha interview, the owner strongly defended his actions by pointing out that being a manager at a lawn-care service means actually doing some of the outdoor work; and Chris—an objectively stronger candidate in the physical sense—seemed more apt for that. The question to ask here—and it’s one that comes up time and again in discussions of occupational segregation—is the extent to which the outdoor work requirement is a legitimate reason for hiring Chris or an excuse for excluding Julie (because the owner doesn’t believe women should be in that line of work).
The Ethics of Women’s—and Men’s—Work
What kind of ethical arguments can be mounted for and against the idea that occupational segregation ought to exist? Possibly the strongest argument in favor runs through a utilitarian theory—one that judges as ethically correct any act that raises a society’s overall happiness. The theory’s cutting edge is the requirement that individual interests be sacrificed if that serves the greater good. For example, occupations requiring hard physical strength (firefighter, logger, construction) may require strength tests. These tests, which more or less measure brute power, are going to weed out most women—so many, in fact, that it may make practical sense to essentially designate the job as a male realm, and to do so even though it may be unfair to a very few physically strong women. That unfairness is erased, in ethical terms, by the requirement that the general welfare be served.
There are a number of responses to this argument. One is to say that the general position of firefighter should be open to everyone, but every firehouse should make sure there are a few big guys in the mix in case smoke-inhalation victims need to be carried down perilous ladders. Another response is to concede that there are some occupations that may be right for one or another gender but draw the line firmly there and demand equal opportunity everywhere else. Another, more polemical argument is to assert that the goal of a gender-neutral society is so important and worthwhile that if it means sacrificing performance in some occupations, then the sacrifice should be made. The greater good is better served by occupational equality than by the certainty that the 250-pound weight-lifting guy will be the one who happens to be in the firehouse when the alarm goes off even if it goes off because it’s your apartment that’s on fire.
Another way to argue against occupational segregation of any kind, no matter the circumstances, starts from rights theory and the premise that the highest ethical value is personal freedom and opportunity: what’s always recommendable is maximizing our ability to pursue happiness as each of us sees fit. Within this model, it becomes directly unethical to reserve some jobs for women and others for men because that setup limits both men and women; it impinges on their basic freedom.
Like utilitarian theory, this freedom-based argument can be twisted around to work in the other direction. If individual freedom is the highest ethical good, the reasoning goes, then shouldn’t business owners be able to hire whomever they like? There may be an owner out there who simply doesn’t want to hire guys. Perhaps there’s no rational reason for the exclusion, but if individual freedom is the highest good, there’s no strong ethical response to the preference. The only open pathway is to say that if you don’t like the fact that this owner isn’t hiring men, then you should make your own company and you can hire as many of them as you wish.
Comparable Worth
Going back to the list of gender-concentrated occupations, some on the women’s side really aren’t so different from those on the men’s side in terms of skill and training required, effort exerted, and responsibility held. Take hairstylists and cosmetologists from the woman’s list and automotive body repairers from the guy’s list. While it’s true that a lot of the hairdressers wouldn’t be caught dead working in the body shop and vice versa, their jobs really aren’t so different: fixing hair and giving cars makeovers. The wages are different, though, at least according to statistics that come from the San Jose Mercury News. Doing hair will net you about \$20,000 a year, and working in the car shop gets you \$35,000. Silicon Valley Blogger, “Traditional Jobs for Men and Women and the Gender Divide,” The Digerati Life (blog), May 29, 2007, accessed May 27, 2011, http://www.thedigeratilife.com/blog/index.php/2007/05/29/traditional-jobs-for-men-and-women-the-gender-divide.
This reality is at odds with the doctrine of comparable worth, which states that when two occupations require comparable levels of skill, training, effort, and responsibility, they should be rewarded with comparable salaries. The gender problem associated with comparable worth is that statistical evidence suggests that so-called women’s work has consistently garnered lower wages than men’s work. The hairdresser and the body shop example isn’t an anomaly but a representative of the larger reality. According to the US government, the median income of American working women is \$27,000, while for men it is \$39,000. More, the differences hold when adjusting for educational levels. For high school grads, it is \$21,000 versus \$32,000. For college grads, it’s \$40,000 versus \$60,000. At the PhD level, it’s \$55,000 versus \$78,000. “Table PINC-03. Educational Attainment—People 25 Years Old and Over, by Total Money Earnings in 2005, Work Experience in 2005, Age, Race, Hispanic Origin and Sex,” Current Population Survey (CPS), accessed May 31, 2011, pubdb3.census.gov/macro/032006/perinc/new03_000.htm.
These statistics don’t tell the whole story, however; they never do. As it happens, statistician is one of those professions where there’s a notable pay gap between genders—\$49,000 versus \$36,000 as a median salary—and women get the \$49,000. Jeanne Sahadi, “39 Jobs Where Women Make More than Men,” CNNMoney.com, February 28, 2006, accessed May 31, 2011, http://money.cnn.com/2006/02/28/commentary/everyday/sahadi_paytable/index.htm.
Glass Ceiling
What happens when a woman goes into a field traditionally dominated by men and starts strong, receiving salary and treatment comparable with her male workmates but then hits a promotion wall? Called the glass ceiling, it’s the experience of women topping off in their career for, apparently, no reason beyond the womanhood. A good example of the glass ceiling—and also of breaking it—comes from Carly Fiorina, the former CEO of the very masculine Hewlett-Packard. In an interview with the web magazine Salon, she discusses the topic candidly. Five of her ideas come through loudly. Rebecca Traister, “The Truth about Carly,” Salon, October 19, 2006, accessed May 31, 2011, www.salon.com/life/feature/2006/10/19/carly_fiorina.
First, in Silicon Valley Fiorina believes there is a glass ceiling at many companies.
Second, she buys the notion that women and men are fundamentally different, at least in this way: they feel comfortable with different kinds of languages and ways of communicating. Compared with Silicon Valley guys, she says, “Women tend to be more communicative, collaborative, expressive. The stylistic differences get in the way [of mutual understanding]. That’s why diversity in the workplace takes real work.” Rebecca Traister, “The Truth about Carly,” Salon, October 19, 2006, accessed May 31, 2011, www.salon.com/life/feature/2006/10/19/carly_fiorina.
Third, differences in the way women and men communicate ultimately doom many women’s professional ascent. As the office culture becomes increasingly male on the way up, women are decreasingly able to communicate with and work well with colleagues.
Fourth, Fiorina believes that given the way things are now in Silicon Valley, if a woman wants to break through to the highest echelons of management, she’s probably going to have to learn male rules, and then play by them. For example, she once pulled on cowboy boots and a cowboy hat, stuffed socks down her crotch, and marched into a hall full of (mostly) men to proclaim, “Our balls are as big as anyone’s in this room!” In the Salon interview, she explains it this way:
Fiorina: Part of the reason I succeeded in Silicon Valley was that I talked to people in a language they understood. When I negotiated in Italy, I ate a lot of pasta and drank a lot of wine. In bringing a team together to focus on a common goal, you have to find common language.
Interviewer: And the language of the business world remains male?
Fiorina: Yes, and particularly that case you cited, it was an incredibly male-dominated, macho culture. They understood balls and boots, they understood what that meant. Rebecca Traister, “The Truth about Carly,” Salon, October 19, 2006, accessed May 31, 2011, www.salon.com/life/feature/2006/10/19/carly_fiorina.
Fifth, in the medium to long term, Fiorina believes the way to truly demolish the glass ceiling is for women to work their way up (like she did) and occupy more high-level posts. “When I went to HP,” she says, “I hoped I was advancing women in business by putting women in positions of responsibility. But it’s clear that we don’t yet play by the same rules and it’s clear that there aren’t enough women in business, and the stereotypes will exist as long as there aren’t enough of us.” Rebecca Traister, “The Truth about Carly,” Salon, October 19, 2006, accessed May 31, 2011, www.salon.com/life/feature/2006/10/19/carly_fiorina.
The Special Case of Motherhood
One advantage Carly Fiorina had on the way up was a husband who cooperated extensively in rearing her children. Still, women alone physically bear children and frequently hold principal responsibility for their care at least through the breast-feeding stage or further. For that reason, a discrete area of business ethics has been carved out for managing the tension between the legitimate interest businesses have in employees continuing their labors without the occasional childbearing and rearing interruption, and the legitimate interest professional women and society generally hold in motherhood and in ensuring that a healthy generation will be arriving to take over for the current one.
One proposal has been the creation of a dual-track career system: one for women who plan to have children at some point in the not-so-distant future and another for those who either do not plan to have children or envision someone else as assuming primary child-care responsibility (a husband, a relative, a paid nanny). Under this scenario, companies would channel women planning for motherhood and child rearing into positions where work could be interrupted for months or even years and then resumed more or less from the same spot. A potential mother would receive an at least informal guarantee that her spot would be held for her during the absence, and upon resumption of duties, her career would continue and advance as though there had been no interruption. In fact, in many European countries including Spain, France, and Germany, such leave is actually required by law. In those countries, the birth of a child automatically qualifies one of the parents (the laws generally treat fathers and mothers indiscriminately as caregivers) for an extended leave with the guarantee of job resumption at the end of the period. Laws in the United States are not so worker oriented (as opposed to business oriented), though some companies have taken the initiative to offer extended parental absences without adverse career effects. These include Abbott Laboratories, General Mills, IKEA, and others.
Theoretically, granting professional leaves for the fulfillment of parental responsibilities makes sense. The problem is that in the real world and in many industries, it’s nearly impossible to go away for a long time and then resume responsibilities seamlessly. In the interim, projects have been completed and new ones have begun, clients have changed, subordinates have been promoted, managers have moved on, and the organization’s basic strategies have transformed. Reinsertion is difficult, and that leads to the fear that companies and managers—even those with the best intentions—will end up channeling those they presume will seek parental leaves into less important roles. The potential mother won’t be the one chosen to pursue research on the company’s most exciting new product—even if she’s the best researcher—because the firm won’t be able to just put product development on hold at some point in the future while she’s away. The end result is that the so-called mommy track for professional life becomes the dead end track.
There are no easy solutions to this problem, though there are ways to limit it. Technology can be a major contributor. Just something as simple as Skype can allow parents at home with young children to “come into” the office regularly. Further, companies can, and increasingly are, providing day care facilities in the building.
Ethically, one way to manage the conflict between professional life and parenting is to locate the interests of those involved, set them on a scale, and attempt to determine how the issue weighs out. So, who are the primary stakeholders along the mommy track: whose interests should be considered and weighed? The mother, to begin with, has a right to pursue success in professional life, and she has the choice to embark on motherhood. A born child has a right to nurturing care, and to the love parents give. A business owner has a right to hire employees (and fire) employees in accord with rational decisions about what will benefit the organization and help it reach its goals. The coworkers and subordinates linked to a prospective parent have the right to not be bounced around by someone else’s personal choices. Society as a collective has a responsibility to nurture the growth of a new generation fit to replace those who are getting old.
The next step is to put all that on the scale. In the United States today, the general consensus is that the business owners’ rights to pursue economic success outweigh the parents’ interest in being successful in both professional and family life and society’s concern for providing an upcoming generation. That weighing can be contrasted with the one done in most countries of Western Europe where, not incidentally, populations are shrinking because of low birthrates. In Europe, there’s a broad consensus that the workers’ interest in combining professional and personal lives, along with society’s interest in producing a next generation, outweighs the business’s interest in efficiency and profit. For that reason, the already-mentioned laws guaranteeing extended family leave have been implemented.
Key Takeaways
• Gender discrimination can take the form of occupational segregation.
• Strong ethical arguments may be formed for and against some forms of occupational segregation.
• The doctrine of comparable worth prescribes comparable pay for distinct occupations that require similar capability levels.
• The glass ceiling blocks women from advancing to the highest professional levels for reasons outside of dedication and capability.
• The fact that women can also be mothers introduces a broad set of ethical questions about the rights of employers and a society’s priorities.
Exercise \(1\)
1. What are the three steps defining gender discrimination?
2. What are some of the causes of occupational segregation?
3. What is an argument in favor of some occupational segregation? What is an argument against occupational segregation?
4. What is comparable worth?
5. What are two explanations for the existence of a glass ceiling?
6. How might the existence of a career track dedicated to those who expect to rear children be criticized in ethical terms? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/10%3A_The_Tense_Office-_Discrimination_Victimization_and_Affirmative_Action/10.02%3A_Gender_Discrimination_and_Occupational_Segregation.txt |
Learning Objectives
1. Indicate characteristics beyond race and gender that may be targeted for discrimination.
2. Form a general definition of discrimination in the workplace.
3. Define minority status.
4. Analyze victimization.
The Diversity of Discrimination
There’s a difference between history and ethics. Historically, racism and sexism have been the darkest scourges in the realm of discrimination. In straight ethical terms, however, discrimination is discrimination, and any isolatable social group is equally vulnerable to negative prejudice in the workplace. The Civil Rights Act of 1964 extends protection to those stigmatized for their religion or national origin. In subsequent years, amendments and supplements have added more categories, ones for age and disability. Currently, there are no federal laws prohibiting discrimination based on sexual orientation, though measures have been enacted in states and localities. Other measures identifying and protecting further distinct groups exist on local levels.
What holds all these groups together is that they fit into the most general form of the definition of discrimination in the economic realm:
1. A decision affects an individual.
2. The decision is based on personal characteristics clearly removed from job-related merit.
3. The decision rests on unverified generalizations about those characteristics.
Even though discrimination in the realm of business ethics can be wrapped up by one definition, it remains true that distinct groups victimized by discrimination have unique and diverse characteristics affecting the way the issue gets managed. Two types of characteristics will be considered here: discrimination based on traits that are concealable and discrimination based on traits that are (eventually) universal.
Concealable and Inconcealable Status
One of the enabling aspects of race and gender discrimination is that it’s normally easy to peg someone. If you don’t think Asians do good work, you’re probably going to see who not to hire. The same goes for gender, age, and many disabilities.
Other traditionally discriminated-against groups aren’t so readily identifiable, though: the characteristics marking them as targets are concealable. For example, it’s not so easy to detect (and not so difficult to hide) religious beliefs or sexual orientation. John F. Kennedy, many young people are surprised to learn today, faced considerable resistance to his presidential ambitions because of his religion. In fact, he considered the fact that he was the first Roman Catholic president of the United States as one of the higher virtues of his story. While the Protestant-Catholic divide has faded from discriminatory action in America, other splits have taken its place—Christian and Muslim, for example. No matter the particular religion, however, most individuals going into the work world do have the opportunity to simply reduce that part of their identity to a nonissue by not commenting on or displaying their religious beliefs.
A similar point can be added to considerations of national identity. Only a generation ago Italians were disdained as “wops.” Legendary football coach Joe Paterno (no stranger to insults himself: “If I ever need a brain transplant, I want it from a sports reporter because I know it’s never been used.”) remembers being derided as a wop in his career’s early days. If you wander down the street calling people a “wop” today, however, hardly anyone will know what you’re talking about, which indicates how quickly discrimination against a group can fade when the source (in this case nationality) isn’t readily visible.
Ethical questions raised by the possibility of invisibility include “In the business world, do those who feel they may be discriminated against for a personal characteristic that they can conceal have any responsibility to conceal it?” and “If they choose not to conceal, and they’re discriminated against, do they bear any of the blame for the mistreatment?”
Universality versus Individuality
One obvious reason it’s easy for white men to discriminate against racial minorities and women is that they don’t have to worry about riding in that boat themselves. Age is different, however. All of us have gray years waiting at the end of the line. That hasn’t stopped people from denying jobs to older workers, however. Take this report from California:
When a then-emerging Google recruited engineer Brian Reid in the summer of 2002, it appeared to have landed a Silicon Valley superstar. Reid had managed the team that built one of the first Internet search engines at AltaVista. He’d helped co-found the precursor company to Adobe Systems. He’d even worked on Apollo 17.
But within two years, Google decided that the 54-year-old Reid was not a “cultural fit” for the company and fired him, allegedly after co-workers described him as “an old man,” “slow,” “sluggish” and “an old fuddy-duddy.” Reid responded with an age discrimination lawsuit blasting Google’s twentysomething culture for shunning his generation in the workplace. “Ex-Google Worker’s Case Goes to High Court,” San Jose Mercury News (CA), May 24, 2010.
Reid can take satisfaction in knowing that, eventually, these twentysomethings are going to get what’s coming to them. Is it more than that, though? Is the fact that they too share that fate a license for their discrimination? Assuming those who fired Reid aren’t hypocrites, assuming they accept that one day they too will be subject to the same rules, can Reid really claim any kind of injustice here? In terms of fairness at least, it seems as though the Google whippersnappers should be able to treat others in terms they would accept for themselves.
On the other side, if his work performance matches his younger peers, if the only difference between Reid and the others is that his hair is gray and he doesn’t know who Lady Gaga is, then his case does fit—at least technically—the definition of invidious discrimination. Google might be wrong on this one.
Regardless of which side you take, there’s a fundamental ethical question here about whether discrimination can count when it’s based on a characteristic that’s universal, that everyone shares.
What Is a Minority?
The boundaries marking who can rightfully claim to belong to a group falling victim to systematic discrimination in the workplace are shifting and uncertain—in different times and places the victims share different characteristics. For that reason, it makes sense to try to form a definition of personal vulnerability that doesn’t rely only on describing specific personal traits like skin color or gender but that can stretch and contract as society evolves. The term minority, as understood within the context of workplace discrimination, is sometimes summoned to perform this role.
To be part of a minority means to belong to a group of individuals that are the minority within a specific organizational context. Whites, for example, are not a minority population in the United States, but white students are a minority at the University of Texas–San Antonio. Similarly, women make up more than 50 percent of the population but count as a minority in corporate boardrooms where they represent only a small percentage of decision makers.
Being part of a minority doesn’t just mean suffering a numerical disadvantage; it also means having so few peers in a situation that you’re forced to adapt the language, the styles of dress, the sense of humor, the nonwork interests, and so on of people very different from yourself. In the case of the minority white population at University of Texas–San Antonio, it’s difficult to claim that their numerical minority status also forces them to adapt in any significant way to the Hispanic majority—whites can get by just fine, for example, without speaking any Spanish. By contrast, the case of Carly Fiorina wadding up socks in her crotch and screaming out that she has big balls, this is minority behavior. For minorities in a man’s world, if you want to get ahead you have to adapt. To a certain extent, you need to speak and act like a man.
The term minority can be defined by three characteristics:
1. Physical and/or cultural traits set a group of individuals within a community apart from the customs and members that dominate the collective.
2. The physical and/or cultural traits that set the group apart are either disapproved of, or not understood by the dominant group. In Carly Fiorina’s case, these traits included her gender and, more importantly, her feminine use of language. As she put it, “The stylistic differences get in the way.” Rebecca Traister, “The Truth about Carly,” Salon, October 19, 2006, accessed May 31, 2011, www.salon.com/life/feature/2006/10/19/carly_fiorina. of trying to communicate well with male colleagues. She was a minority because she wasn’t well understood.
3. A sense of collective identity, mutual understanding, and common burdens are shared by members of the minority group. Fiorina sensed this collective identity and burden very clearly when she said, “I hoped I was advancing women in business by putting women in positions of responsibility. But it’s clear that we don’t yet play by the same rules as men, and it’s clear that stereotypes about women in business will exist as long as there aren’t enough of us.” Rebecca Traister, “The Truth about Carly,” Salon, October 19, 2006, accessed May 31, 2011, www.salon.com/life/feature/2006/10/19/carly_fiorina.
The advantage of using the term minority to name a group vulnerable to discrimination in the workplace is connected to the rapidly changing world, one where those subjected to discriminatory treatment come and go. For example, a tremendous influx of Spanish-speaking immigrants from Mexico have recently made that group a target of sharper discrimination, while the marginalization that the Irish once experienced in the United States no longer seems very threatening. There’s no reason to believe that this discriminatory evolution will stop, and in the midst of that shifting, the term minority allows the rules of vulnerability to discrimination in the workplace to remain somewhat steady.
What Is a Victim?
As the number of characteristics classified as vulnerable to discriminatory mistreatment has expanded, so too has a suspicion. It’s that some of those claiming to suffer from discrimination are actually using the complaints to abuse others, or to make excuses for their own failures. This is called victimization.
To accuse someone of being a victim is to charge that they are exploiting society’s rejection of discrimination to create an unfair advantage for themselves. There are a range of victimization strategies running from strong to weak. Strong victimization is individuals in protected groups who aren’t suffering any discrimination at all claiming that they are and making the claim for their own immediate benefit. This is what’s being alleged in an Internet post where a supervisor writes the following about an employee:
This person came out & stated in this meeting that I use a racial slur on a very regular basis in my vocabulary. With my profession, this is something that is EXTREMELY HARMFUL to my status in my job, my respect in my job & community, my reputation, etc. But that word has NEVER been in my vocabulary. I am SO UPSET I do not know what to do! UT alum, August 24, 2005 (9:09 a.m.), “Falsely Accused of Racist Slur,” ExpertLaw Forum, accessed May 31, 2011, http://www.expertlaw.com/forums/showthread.php?t=2887.
Assuming this supervisor’s allegations are true, then the employee was never subjected to racist language or offended by slurs. There was no workplace discrimination. Instead, it sounds like the employee may actually be disgruntled and is aiming for revenge by getting the supervisor in trouble. If that’s what’s going on, then the accusation of racial discrimination has become a workplace weapon: the charge can be invented and hurled at another with potent effect.
Weak victimization occurs when someone works in a context where discrimination is a constant subject of attention, one permeating daily life in the office. In that situation, it can happen that a worker suffering an adverse work evaluation (or worse) comes to the conclusion that it wasn’t poor job performance but minority status that actually caused the negative review. (Possibly, one of the few universal human truths is that we all find it easier and more comforting to blame others for our problems than ourselves.) In the interview with Carly Fiorina—which was done not long after she’d been fired from Hewlett-Packard—the interviewer broaches this possibility very gingerly. Here’s how she puts the question:
I’m predisposed to be sympathetic to the notion that you were treated differently because of your gender. But I’ve also read a lot about actual business mistakes you made.
Fiorina comes back with an ambiguous answer and the interviewer lets it go. For a while. Suddenly, however, after a few softball questions she tries again, more forcefully:
Interviewer: I want to press you on the fact that you missed a quarter’s projections big-time…
Fiorina: Wouldn’t be the first top company that missed a quarter either. Or the last.
Interviewer: Right. But that miss was huge. And you wrote in the book that “building a culture of accountability and execution of discipline requires real and clear consequences for failure to perform.” If you had been told that you were fired because you missed the quarter, would you have understood? Rebecca Traister, “The Truth about Carly,” Salon, October 19, 2006, accessed May 31, 2011, www.salon.com/life/feature/2006/10/19/carly_fiorina.
What’s being intimated here is that Fiorina got so caught up in being a woman in a man’s world that when she got fired, she was so invested in that battle-of-the-sexes way of seeing things that she ended up suspecting sexist discrimination where maybe there wasn’t any.
Weak victimization means that someone is twisting discrimination claims into an excuse for their own imperfections, shortcomings, and failures. Everyone faces adversity in their lives. When that happens, the choices are deal with it or collapse. Accusing someone of being a victim in the weak sense is saying they’re collapsing; they’re using racism or sexism or whatever as an excuse to not confront what most people face every day: an imperfect and sometimes difficult world. So weak victimization is an accusation tinged with exasperation. Here’s what the accusation sounds like in longer form, as posted on an Internet forum:
I genuinely don’t believe that in this country that persecution of minorities exists anymore. This is not to say that these things don’t exist, of course they do in isolation, but being black or gay or a woman is not in any way a barrier to achieving anything that you want to achieve.
I told her that she was playing the victim against an oppression that doesn’t exist, is looking for excuses about things she can’t do rather than looking at what she can do (which is anything she wants) and that she’s being patronizing towards all those from ‘minority’ groups who had gone on to be successful. Thatcher didn’t whine about latent sexism, Obama didn’t complain that being black meant he wasn’t able to do the most powerful job in the world. Gerogerigegege, February 26, 2010 (10:27), “Does Racism/Sexism/Homophobia Exist in Any Meaningful Way in Modern Britain?,” DrownedinSound.com, accessed May 31, 2011, drownedinsound.com/community/boards/social/4248929.
In the ensuing discussion, quite a few posters pick up on the claim that “being black or gay or a woman is not in any way a barrier to achieving anything that you want to achieve.” Some agree, some not so much. What’s certain is that somewhere between Carly Fiorina stuffing socks down her pants and Carly Fiorina leading one of the world’s most powerful companies, and somewhere between black slavery and a black president, there’s a line. No one knows exactly where, but it’s there and it divides a reality where sexism and racism are vile scourges from another reality where they’re things people whine about.
An ethical argument against victimization—against someone playing the role of a victim of discrimination—can be outlined quickly. It begins with the duty to respect your own dignity, talents, and abilities. Those blaming their failures on others are essentially giving up on their own skills; they are concluding that their abilities are worthless when they may not be. If Carly Fiorina believes that her gender makes success in Silicon Valley impossible, and it really doesn’t, then by denying her own talent she’s subtracting from her own dignity.
Key Takeaways
• Discrimination may be applied in a society to a group defined by any physical or cultural trait.
• A successful general definition of discrimination in the workplace must evolve as society and the face of discrimination change.
• Minority is a general category meant to include those vulnerable to discrimination.
• Victimization occurs when vulnerability to discrimination converts into a weapon to use against others, or an excuse for failure.
Exercise \(1\)
1. In your own words, explain the general definition of discrimination.
2. What’s the difference between a concealable and inconcealable characteristic that may leave one vulnerable to discrimination?
3. In your own words, define what it means to be a minority.
4. What’s the difference between strong and weak victimization? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/10%3A_The_Tense_Office-_Discrimination_Victimization_and_Affirmative_Action/10.04%3A_The_Diversity_of_Discrimination_and_Victimization.txt |
Learning Objectives
1. Define affirmative action.
2. Elaborate arguments for and against affirmative action.
3. Discuss the ethics of affirmative action.
4. Indicate why some organizations implement affirmative action policies.
Race-Based Scholarships
“The scholarship,” according to Carlos Gonzalez, an overseer appointed by a federal court, “was designed essentially as a jump-start effort to get the process of desegregation under way.” He was talking about a new race-based scholarship at Alabama State University (ASU). It was triggered by a federal court’s finding that “vestiges” of segregation remained within the Alabama university system: the state was ordered to spend about \$100 million to racially diversify the student body.
Two years later, 40 percent of ASU’s budget for academic grants went to minority students even though they represented only about 10 percent of the student population. That meant minority students got about \$6 of aid for every \$1 going to everyone else.
One beneficiary of diversification was a grad student who accumulated \$30,000 in scholarship money. She said that she would’ve attended the school anyway, but getting the money because of her skin color was an added bonus. “I think it’s wonderful,” she exclaimed, according to a CNN report. Brian Cabell, “Whites-only Alabama Scholarship Program Raising Eyebrows,” CNN, October 30, 1999, accessed May 31, 2011, http://www.cnn.com/US/9910/30/white.scholarships/index.html.
Not everyone came off so well. One big loser was another grad student, Jessie Tompkins. The effort to balance the student body racially meant funding he’d been promised got reassigned to others. He remembered the moment vividly. He’d received an assistantship for three years, but when he went to apply the next year, he learned that the scholarships had been reserved for those with a different skin color. “I said, ‘Ma’am?’ She said, ‘You can apply, but you won’t get it.’” June Kronholz, “Double Reverse: Scholarship Program for whites Becomes a Test of Preferences,” The Center for Individual Rights, Wall Street Journal, December 23, 1997, accessed May 31, 2011, http://www.cir-usa.org/articles/103.html.
As word of the new scholarship policy circulated, temperatures rose. They heightened even more when news got out that the race balancers were more lucrative than the old funding mechanisms that had been available to everyone. The minority set-asides paid for tuition, books, and for room and board, and then added on almost \$1,000 for personal use. While the new students got all that just for showing up inside their color-appropriate skin, Tompkins remembered that he hadn’t even received enough to fully cover tuition; in exchange for his aid, he’d worked for the school by helping coach the track team and by scheduling tennis court use.
The situation reached a boil with one more detail: the revelation that the minority scholarship recipients weren’t as academically qualified as those including Tompkins who were now suddenly being turned down at the funding office. To qualify for financial aid, the new recipients only needed a C average, significantly below what had been required of all applicants in the earlier, color-blind system. That led the editor of the university newspaper, Brandon Tanksley II, to express his frustration and anger this way, “It’s not that they’re minority students, it’s that they’re not competitive.” June Kronholz, “Double Reverse: Scholarship Program for whites Becomes a Test of Preferences,” The Center for Individual Rights, Wall Street Journal, December 23, 1997, accessed May 31, 2011, http://www.cir-usa.org/articles/103.html.
As for Jessie Tompkins, with his scholarship no longer available, he was forced to drop out and take a job handling packages at United Parcel Service. The next year he returned on a part-time-student basis and once again applied for his old scholarship. Again he was rejected. In a newspaper interview he said, “We don’t need race-based quotas. I don’t want anyone telling my children they’re the wrong color. If you want something, you work for it; you just work for it.” June Kronholz, “Double Reverse: Scholarship Program for whites Becomes a Test of Preferences,” The Center for Individual Rights, Wall Street Journal, December 23, 1997, accessed May 31, 2011, http://www.cir-usa.org/articles/103.html.
Eventually, Tomkins connected with the Center for Individual Rights, a nonprofit public interest law firm with conservative and libertarian leanings. The firm was experienced with this kind of complaint: it had previously led a charge against the University of Texas’s affirmative action program. In an article in the Wall Street Journal, Tompkins compares himself to a plaintiff in that important case, Cheryl Hopwood: “We were bumped aside, regardless of our qualifications, because of our race.” June Kronholz, “Double Reverse: Scholarship Program for whites Becomes a Test of Preferences,” The Center for Individual Rights, Wall Street Journal, December 23, 1997, accessed May 31, 2011, http://www.cir-usa.org/articles/103.html.
Tompkins says he’s just like Hopwood, even though she’s a woman and he’s a man, and even though she’s white and he’s black.
As for the administration at the traditionally black Alabama State, they chose not to respond to Tompkins directly, but they did stand behind their affirmative action program. William Hamilton Harris, president at ASU, defended the set-asides this way, “Bringing whites and blacks together on campus will broaden the quality of education and the quality of life at Alabama State.” June Kronholz, “Double Reverse: Scholarship Program for whites Becomes a Test of Preferences,” The Center for Individual Rights, Wall Street Journal, December 23, 1997, accessed May 31, 2011, http://www.cir-usa.org/articles/103.html.
What Is Affirmative Action?
The Civil Rights Act aimed to blind organizations to gender and race and similar distinctions removed from merit. The idea behind the law is an ideal, a theoretically perfect society where discrimination in the invidious sense doesn’t exist. Unfortunately, the real world rarely lives up to ideals. Affirmative action enters here, at the realization that things won’t be perfect just because we make laws saying they should be. What affirmative action does—as its name indicates—is act. It’s not a requirement that organizations stop discriminating; it’s a set of preferences and policies that aggressively counter discrimination, usually in ways that themselves hint at discrimination. There is, even ardent defenders admit, a troubling element of fighting fire with fire where affirmative action operates.
In practice, affirmative action comes in various strengths:
• In the strongest form, quotas are employed to guarantee that individuals from disadvantaged groups gain admittance to an organization. A number of slots—whether they are seats in a classroom or posts in an office—are simply reserved for individuals fitting the criterion. Since quotas inescapably mean that certain individuals will be excluded from consideration for certain posts because of their race, gender, or similar trait, they’re relied on only infrequently.
• In strong form, significant incentives are deployed to encourage the participation of minority groups. In universities, including the historically black Alabama State University, special scholarships may be assigned to attract whites to campus. In private companies, bonuses may be offered or special accommodations made for targeted individuals. A mentor may be assigned to guide their progress. Statistics may be accumulated and care taken to ensure that salary hikes and promotions are being distributed to members of the aggrieved demographic.
• Moderate affirmative action measures typically mean something akin to the tie goes to the minority. Whether a university is admitting students to next year’s class or a business is hiring new sales representatives, the philosophy here is that if two candidates are essentially equally qualified, the one representing a disadvantaged group will be selected.
• Weak affirmative action measures refuse to directly benefit one or another identity group. Steps are undertaken, however, to ensure that opportunity is spread to include minority candidates. Frequently, this means ensuring that the application pool of candidates for a post or promotion includes individuals from across the spectrum of genders, races, and similar. A commitment to implement his policy was part of the Abercrombie & Fitch discrimination lawsuit settlement. The company in essence said they’d been doing too much recruiting at overwhelmingly white fraternities and sororities, and they promised to branch out.
The history of affirmative action has been brief and turbulent. Since the early 1970s, the courts—including the US Supreme Court—have visited and revisited the issue, and repeatedly reformed the legally required and allowed strength of affirmative action. The specific physical and cultural traits affirmative action policies address have also stretched and contracted. In the midst of all that, individual states have formed their own rules and guidelines. And for their part, companies have scrambled to bring policies into line with accepted practice and, in some cases, to take the lead in establishing standards. Because there’s no sign that the legal and historical developments will settle in the near future, this section will concentrate only on the ethics and the broad arguments surrounding affirmative action.
Arguments for and against Affirmative Action Policies
Arguments in favor of affirmative action include the following:
1. Affirmative action is necessary to create fairness and equal opportunity in organizations because discrimination is so ingrained. When Carly Fiorina went to Hewlett-Packard, she found a culture so thoroughly masculine that it was difficult for her to communicate well with her colleagues. In that kind of environment, one where it’s difficult for a woman to really make herself understood, forcing women into the workforce is necessary to open channels of communication so that more may flow without needing the help. Similarly at the historically black Alabama State University, the concern was that few white students would want to be the first to confront the specific traditions and customs of the longtime black school. Consequently, it’s necessary to force the doors open with attractive scholarships so that later, with the comfort level raised, more whites will follow.
2. Affirmative action will stimulate interest in advancing at lower levels of the organization. Even if Hewlett-Packard really is gender neutral with respect to picking a CEO, it may be necessary to put a woman in the post so that younger women at the company feel that the way is open to the very highest levels. In other words, it’s not until people actually see that they can become a CEO or enroll at Alabama State that they really make the attempt. In the absence of that seeing, the aspiring may not be there and the result is a company without women leaders, or a historically black university without whites, even though the doorways are wide open to them.
3. Affirmative action benefits third parties. Sometimes we think of affirmative action as being about a tight set of winners and losers. When Carly Fiorina went to HP, it’s very possible that a white guy didn’t get the job. When a white student got a scholarship at Alabama State, Tompkins lost his. But the stakeholders don’t end there. Society as a whole will be more harmonious as discrimination recedes. To the extent that’s true, the tangible benefits of affirmative action climb significantly even while it remains true that there are individual losers.
4. Affirmative action can reduce tensions in a university, an office, or any organization by offering assurances that discrimination of minorities will not be tolerated, and also by opening the workplace to a diversity of viewpoints.
5. Affirmative action benefits organizations by helping them reach their goals. The more open an organization is to all candidates for all positions, the better the chance that they’ll find someone truly excellent to fill the role. Affirmative action, by expanding the range of people considered for posts, helps the organization excel in the long term.
6. Affirmative action is necessary as compensation for past wrongs. Even if tomorrow all discrimination magically disappears, there’d still be a long legacy of suffering by minorities who didn’t get the opportunities available to their children. By giving those children a little advantage, some of the historical unfairness balances out.
Common arguments against affirmative action include the following:
1. Affirmative action is discrimination (just in reversed form), and therefore it’s wrong. When you privilege a minority at the expense of, say, a white male, you’re treating the white male unfairly because of skin color and gender, and that must be unacceptable because the reason we have affirmative action in the first place is that we’ve all agreed that racial and gender discrimination are unacceptable.
2. Affirmative action is discrimination (just in reversed form), and therefore it reinforces what it combats. When you privilege a minority at the expense of, say, a white male, you’re treating the white male unfairly, and so you’re sanctioning the way of thinking that caused the problem in the first place. When you start selecting people for scholarships or jobs because of their skin color or gender, the larger point is you’re reinforcing the habits of discrimination, not eliminating them.
3. The best way to eliminate discrimination is to let the law, markets, and time do their work. The law, which prohibits discrimination, should be enforced scrupulously, no matter who the infractor might be. More, companies that are discriminatory will put themselves out of business in the long term because competitors that hire the best talent regardless of minority status will eventually win out. With time, the conclusion is, discrimination will be stamped out, but trying to hurry the process may just create social rancor.
4. Affirmative action can be unfair and damaging to third parties. Surgeons, firefighters—those kinds of jobs are vital to all individuals. Lives are at stake. If a surgeon who otherwise would have failed medical school eventually got her degree because the school needed to graduate a few minority female doctors to fulfill their affirmative action requirements, the people who pay may be patients.
5. Affirmative action is unfair to minorities who are treated as tokens. Minority candidates for positions who would win the post on merit alone see their hard work and accomplishments tarnished by suspicion that they didn’t really earn what they’ve achieved. Minorities, consequently, can never be successful because even when they merit respect in the classroom or in the workplace, they won’t get it.
6. Affirmative action creates a tense organization. The web of resentments lacing through classrooms and offices touched by affirmative action are multiple and complex. Nonminority workers may resent special privileges given to those favored by affirmative action. Also, because such privileges are handled discretely by HR departments, the tensions might exist even where affirmative action isn’t active: suspicion that others are receiving special treatment can be as aggravating as the certainty that they are. The list of potential angers continues, but the larger problem with affirmative action is the social stress it may create.
7. Affirmative action damages organizations. By forcing them to evaluate talent in ways outside of merit, it diminishes their competitiveness, especially against companies from other states or nations where affirmative action implementation is less rigid.
8. Affirmative action doesn’t compensate past wrongs. Those who suffer today because their scholarship or their promotion is taken by an otherwise undeserving minority are paying the price for past discrimination even though they may have never discriminated against anyone. Further, those who benefit today aren’t the ones who suffered in the past.
Finally, an important point to note about the debate swirling around affirmative action is that there’s broad agreement on the goal: diminishing and eliminating discrimination in organizations. The conflicts are about how best to do that.
The Greater Good versus Individual Rights: The Ethical Prism of Affirmative Action
In business ethics, few subjects raise emotions like affirmative action. There are a number of reasons, and one is that the ethics are so clear. In all but its weakest form, affirmative action stands almost straight up on the divide between individualism and collectivism.
• Do you belief ethics are about individual rights and responsibilities, or should ethics revolve around society and what benefits the larger community?
• Where does right and wrong begin? Is it with you and me and what we do? Or is it the society as a whole that must be set at the start and before any other concern?
If you believe that individuals center ethics, it’s going to be hard (not impossible) to defend favoritism, no matter how noble the goal. An ethics based on fundamental personal duties—especially the requirement for fairness—demands that all men and women get an even shot in the workplace. Any swerve away from that principle, whether it’s to favor whites at a historically black university in Alabama, or women in Silicon Valley, or any other minority group anywhere else, is going to be extremely difficult to justify. Further, if you believe that ethics begins with individuals and their rights to freedom and to pursue happiness, then blocking the opportunities allowed for some just because they don’t fit into a specific race or gender category becomes automatically objectionable.
On the other side, if you believe in the community first, if you think that society’s overall welfare must be the highest goal of ethical action, then it’s going to be hard (not impossible) to deny that some form of affirmative action balancing, at some places and times, does serve the general welfare and therefore is ethically required. Thinking based on utilitarianism accepts that divvying out opportunities in terms of minority status will harm some individuals, but the perspective demands that we only bear in mind the total good (or harm) an action ultimately does. With respect to affirmative action, it may be true that its proponents sometimes push too far, but it’s very difficult to look at workplaces and schools through the second half of the twentieth century and not concede that society as a whole does in fact benefit in at least some of the instances where special efforts are made to support the opportunities of some historically disadvantaged groups. Specific individuals may suffer when these social engineering strategies are implemented, but the general benefit outweighs the concern.
Why Do Public Institutions and Private Companies Implement Affirmative Action Policies?
There are a number of reasons organizations implement affirmative action policies, and not all are motivated by social idealism. First, some companies are simply required to do so because they want to work for the US government. According to current law, all businesses holding contracts with Washington, DC, in excess of \$10,000 are required to have at least a weak affirmative action program in place. With respect to public institutions including universities, since their funding derives to a significant extent from the government, they typically are subject to governmental policy directives.
Another very practical reason affirmative action policies are implemented is to prevent future lawsuits. The suing of organizations, businesses, and individuals for damages alleging discrimination can be quite lucrative, as the \$40 million lawsuit against Abercrombie & Fitch indicates. More, a business may even choose to quickly hand over millions of dollars to settle a lawsuit of dubious merit just to avoid the bad publicity of a nasty, public, and prolonged court fight. Lawyers, of course, have picked up on this and are constantly probing for weak organizations, ones where just the appearance of some kind of discrimination may be enough for a shakedown. Given that reality, prudent companies will take preventative action to insulate themselves from claims that they’re discriminatory, and an affirmative action policy may serve that purpose.
A set of more positive reasons for an organization to implement affirmative action policies surrounds the belief that companies benefit from a diverse workforce:
• Diversity may help win business with a new consumer group.
• Diversity may help break minds out of ruts or just shake things up creatively.
• An affirmative action policy may be part of an organizational strategy to benefit from underused human resources in an area. This strategy generally begins with a utilization analysis, which is a spreadsheet representation of all the work positions in an organization, along with the characteristics of those filling the slots and then a comparison between those numbers and the demographic of qualified people in the immediate geographic region. If, to take a simple example, the company’s legal team is 90 percent white, and local data shows that 50 percent of the area’s lawyers are Asian, that tends to indicate the area’s legal resources are being underutilized: there are a lot of good Asian legal minds out there that for some reason aren’t getting into the company workforce.
Finally, regardless of whether an affirmative action policy may help the bottom line by protecting against lawsuits or by improving employee performance, some organizations will implement a program because they believe it’s part of their responsibility as good corporate citizens in a community to take steps to serve the general welfare.
Key Takeaways
• Affirmative action seeks to end discrimination by giving some amount of preference to minorities.
• There are multiple strong arguments in favor of and against affirmative action.
• The ethics of affirmative action center on the question of whether the individual or the community should receive priority.
• Organizations implement affirmative action policies for reasons of self-interest or for altruistic reasons.
Exercise \(1\)
1. What are the differences between strong and weak affirmative action?
2. Explain two arguments in favor of affirmative action.
3. Explain two arguments against affirmative action.
4. Why does conflict between individualism and collectivism exist at the core of the ethics of affirmative action?
5. Why may a company pursue a strong affirmative action policy? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/10%3A_The_Tense_Office-_Discrimination_Victimization_and_Affirmative_Action/10.05%3A_The_Prevention_and_Rectification_of_Discrimination-_Affirmative_Action.txt |
The Zinger and the Slur
Source: Photo courtesy of David Goehring, http://www.flickr.com/photos/carbonnyc/99785459/.
Football coach Joe Paterno’s on-field prowess is only slightly more legendary than his sharp tongue. This is one crowd favorite: “If I ever need a brain transplant, I want one from a sports writer because I’ll know it’s never been used.” Mike Bianchi, “Panthers Gm Proves Paterno Barb Wrong,” Orlando Sentinel, January 31, 2004, accessed May 31, 2011, http://articles.orlandosentinel.com/2004-01-31/sports/0401310276_1_sports-writer-silly-stuff-recruiting-visits.
Most people find this to be pretty funny. And though it rubs some sports writers the wrong way, no one is going to file a lawsuit or claim antidiscriminatory protection is needed to protect the offended. On the other hand, JoePa—as he’s called around Pennsylvania—himself suffered taunting as a younger man. People called him a “wop,” a slur attacking someone’s Italian heritage (like the more common “guido” or calling a Chinese person a “Chink”).
Exercise \(1\)
1. From an ethical viewpoint, and within a discussion of discrimination, why does the brain transplant zinger get a green light while the wop slur seems objectionable?
Working at Columbia University
Source: Photo courtesy of Tim Schapker, http://www.flickr.com/photos/albany_tim/3536902765.
This comes from the Columbia University website: “As an equal opportunity and affirmative action employer, the University does not discriminate against or permit harassment of employees or applicants for employment on the basis of race, color, sex, gender (including gender identity and expression), pregnancy, religion, creed, national origin, age, alienage and citizenship, status as a perceived or actual victim of domestic violence, disability, marital status, sexual orientation, military status, partnership status, genetic predisposition or carrier status, arrest record, or any other legally protected status.” “Office of Equal Opportunity and Affirmative Action,” Columbia University, accessed May 31, 2011, http://www.columbia.edu/cu/vpaa/eoaa.
Exercise \(2\)
1. Looking at this list of characteristics that Columbia doesn’t discriminate against, can you quickly put in your own words what each of them means?
2. What’s the difference between unintentional and intentional discrimination?
• Are some of these characteristics more vulnerable than others to unintentional discrimination? Which ones? Why?
• Are some of these characteristics more vulnerable than others to intentional discrimination? Which ones? Why?
3. Which of the protected characteristics are concealable, meaning that in most cases a job applicant could fairly easily hide or not reveal whether he or she has the trait? Which aren’t so concealable?
4. Which characteristics are universal (we’re all afflicted and therefore vulnerable to discrimination) and which ones are individual (some of us have the trait and some don’t)? In your opinion is one group more vulnerable to discrimination? Why?
5. If you wanted to stop discrimination at Columbia University, could you rank the protected characteristics in terms of their importance? Which forms of discrimination would be most important to combat and which wouldn’t matter so much? Or are they all equally important? Justify your answer.
6. Are there any characteristics you would add to the list? In terms of doing ethics, is there any problem with a list this long?
7. Are there any characteristics that really shouldn’t be on the list? Which ones? Why?
8. Hypothetically, John Smith has applied for a maintenance post at Columbia. The job entails routine and emergency plumbing and fixing of general problems, everything from burned-out lightbulbs to graffiti. More or less, the job is to walk around and make sure things are in working order. He’d be working the night shift from 11 p.m. to 7 a.m. His assigned buildings would be a classroom and three coed dorms. He has been arrested three times for attempted rape of young women, but there was never enough evidence to convict.
• Susan Rieger heads the Columbia University employment office. It’s part of her job to defend the school’s policies. In ethical terms, how do you suppose she might defend Columbia’s refusal to discriminate on the basis of arrest record?
9. Columbia won’t discriminate on the basis of religious belief. Historically, some creeds have been singled out more than others for abuse, but one that’s not often found on the list of mistreatment is Haitian Voodoo. Houngan Hector of New Jersey identifies himself as an asogwe priest of Haitian voodoo. His story is interesting. He claims to have been “mounted” by an ancestor at the age of seven, and so began his spiritual journey. Eventually, it led Houngan Hector to perform spiritual cleansings for money. They haven’t always gone well. According to this newspaper story in the Philadelphia Daily News: “Lucille Hamilton paid \$621 to have her ‘spiritual grime’ removed by voodoo high priest Houngan Hector in an ordinary townhouse in Camden County. Hamilton, 21, a male living as a woman, flew in on Friday from her home in Little Rock, Arkansas to take part in the three-day spiritual cleansing. By Saturday night Hamilton was dead, and authorities are awaiting results of an autopsy and toxicology tests to determine exactly what happened.” “Transvestite Dies At Voodoo Ceremony,” OddCulture, accessed May 31, 2011, oddculture.com/culture/transvestite-dies-at-voodoo-ceremony.
Here’s Houngan Hector’s advertisement for his services on his MySpace page, as it was reported in OddCulture: “I have over 15 years of experience helping individuals resolve their issues, and well over 9 years of helping people through the means of the Haitian Voodoo tradition. Having gotten individuals out of jail, brought lovers back, and improved people’s financial situation, I keep myself humble remembering it is not I who does it. It is God and Ginen who resolves.” “Transvestite Dies At Voodoo Ceremony,” OddCulture, accessed May 31, 2011, oddculture.com/culture/transvestite-dies-at-voodoo-ceremony.
The three basic ethical arguments against discrimination (and, in this case, discrimination based on personal religious belief) are fairness, rights, and utilitarianism.
• Choose one and make the case that Houngan Hector—who was never charged with any crime—should be treated like any other applicant for a job at Columbia University.
• Can any of the three arguments be used to show that discriminating against Haitian voodoo believers is ethically acceptable, even recommendable?
Susan Rieger in Trouble: Randy Raghavendra and Zenobia White-Farrell
Source: Photo courtesy of Richard Rutter, http://www.flickr.com/photos/clagnut/46815739.
Susan Rieger heads Columbia University’s Office of Equal Opportunity and Affirmative Action, and she has a tough case with Randy Raghavendra. He’s an analyst at Columbia’s Office of Institutional Real Estate who got passed over for a promotion. The spot went to a younger white woman. Raghavendra, who’s a dark-skinned Indian American, accused that “Columbia practices blatant racial discrimination and various deceptive tactics to keep out blacks and other dark-skinned minorities from higher-paying managerial and executive positions of power.” “NRI Sues Columbia University for Racism, Times of India, November 22, 2003, accessed May 31, 2011, businessethicsworkshop.com/Chapter_10/susan_rieger_in_trouble.html.
Exercise \(3\)
The case’s specifics go back and forth:
1. Raghavendra points out that when he interviewed for the promotion, it had already been given to the white woman. His interview, therefore, was a “joke,” as he put it, “a fake interview.” The university answered that the hiring for that post had been handled by an outside headhunting company, which was a common practice at Columbia.
Assume the outside company did engage in discriminatory practices. Does the fact that it’s an independent enterprise cleanse Columbia University of responsibility? Or is the university equally responsible? Or is it actually worse that they’re hiding behind an outside firm? Justify your answer.
2. An administrator at the university once asked Raghavendra, “Do you often get hassled at airport security?” The suggestion, according to Raghavendra, was that he looked like a potential terrorist. The administrator didn’t deny the comment but affirmed that the idea that it was racist was “bizarre” and “silly beyond belief.”
• How could you make the case that this is an example, of individual, isolated, unintentional discrimination?
• Who gets to decide whether a comment is racist? How is the decision made? Does or doesn’t this conflict resemble the one you see on MTV videos where blacks openly refer to each other with a specific term that would earn a white person who used the word a lifetime ban from the channel?
3. Raghavendra argues that he didn’t get his own office while several white workers in lower posts did have their own office as well as a separate mailbox. The university responded that office and mailbox space is distributed by seniority: the lower-level white workers who had their own office had worked there longer.
Seniority is viewed by most as a generally fair way of distributing offices. It’s also fair, according to common opinion, to divide them up in terms of rank. Would it be right or wrong, however, for Columbia to simply say that either of the two systems will be used interchangeably, but the choice will be made in terms of minorities: whichever system allots the best offices to minorities will be implemented? Justify your answer.
4. Raghavendra originally took his case to Susan Rieger, head of the Office of Equal Opportunity and Affirmative Action. After three months he withdrew it, however, claiming that they played games with him and never really investigated the charges. The university responded that he “failed to utilize internal administrative remedies provided by Columbia.”
Raghavendra is claiming that Columbia discriminates against him. As an employee of Columbia, does he have any ethical responsibility to try to work out the issue inside that organization? If so, what is the responsibility? As a member of society, does he have an obligation to take his claim outside the university? If so, what is the responsibility?
5. Raghavendra sued for punitive damages. That’s money as punishment for discrimination, and it’s an amount beyond that which may have been lost in wages and benefits because of mistreatment. More, as part of any settlement, Raghavendra wanted to be awarded a job assignment as manager of finance and accounting at Columbia. He says he’d like to stay at the university after the suit is settled. Does this decision affect the way you see his case against Columbia? Why or why not? Should it? Why or why not?
6. Raghavendra notes that there are no African Americans in higher-level positions in his office. There is a Pakistani who has a higher title, but Raghavendra points out “he’s not really that dark-skinned.”
Within the context of the ethics of discrimination, what does it mean to be a victim? What types of victimhood are there? Is there any reason to ask here whether Raghavendra might be one of these kinds of victims? If so, what is it? If not, why not?
7. What makes the case especially difficult for Rieger, the Columbia point person on all this, is that she’s trying to balance discrimination claims while fending off a lawsuit herself. Her post had been occupied—on a provisional basis—by Zenobia White-Farrell, a black woman. Columbia offered to make the job permanent with a salary of \$80,000. White-Farrell responded that she’d accept but only on the condition that the salary was upped to \$100,000. Columbia offered only \$83,000. White-Farrell resigned. Soon after, Columbia hired Rieger at a salary of \$107,000. White-Farrell sued, alleging discrimination.
• What factors could possibly have justified offering Rieger so much more than White-Farrell?
• How could you describe this case as an example of a glass ceiling for minority women?
• The Columbia nondiscrimination code protects both gender minorities (women) and racial minorities. Is White-Farrell more protected than Rieger because she fits two categories and Rieger only one? Does the answer affect the ethical strength of White-Farrell’s case? Justify your answer.
• Assume that, strictly in terms of merit, Rieger deserved a higher salary than White-Farrell for the same job. Rieger had, say, more years of experience and a higher degree. Could you make a utilitarian argument that because the ethically right thing to do is just that which serves the general society’s welfare, White-Farrell should have been offered \$100,000, even though, again, strictly in terms of merit, she didn’t deserve that much?
8. Columbia University is an Affirmative Action institution. They aren’t satisfied with gender and racial neutrality; it’s the institution’s policy to promote and to some extent favor minority candidates for jobs.
• Can you make the case that, with respect to the particular job of overseeing all hiring at the university, there’s a good practical reason—which is also ethically acceptable—to seek a white male to direct the office? What is the case?
• Can you make the case that with respect to this particular job, there’s a good practical reason—which is also ethically acceptable—to seek a multiple minority (a gender plus racial minority or some similar combination) to direct and oversee hiring? What is the case?
9. The name of the office Susan Rieger leads is the Office of Equal Opportunity and Affirmative Action. What is “Equal Opportunity?” What is “Affirmative Action?” Does the title of this office make sense? If so, how? If not, why not?
Google Celebrates Diversity...and Profit
Source: Photo courtesy of dichohecho, http://www.flickr.com/photos/dichohecho/2545363497.
This statement comes from Google CEO Eric Schmidt on the corporate web page titled “Google Celebrates Diversity”: “Our products and tools serve an audience that is globally and culturally diverse—so it’s a strategic advantage that our teams not only encompass the world’s best talent but also reflect the rich diversity of our customers, users, and publishers. It is imperative that we hire people with disparate perspectives and ideas, and from a broad range of cultures and backgrounds. This philosophy won’t just ensure our access to the most gifted employees; it will also lead to better products and create more engaged and interesting teams.” “Diversity@Google: A place to be you,” Google, accessed May 31, 2011, http://www.google.com/corporate/diversity/index.html.
This is a very carefully worded paragraph, and beneath its motivational tone there are firm statements about diversity in the Google workplace. They include the following:
• Google carefully avoids mentioning race, gender, and similar requirements for any particular position. The company doesn’t get involved in discussions about how many Catholic females over fifty years old and with a disability work there. Like most contemporary organizations, Google avoids strict quota systems.
• Google will seek to hire “the world’s best talent.”
• Google, apart from hiring the best raw talent, will seek employees reflecting “the rich diversity of our customers.”
There are also clear justifications for the diversity side of the hiring strategy. Google will take action to contract a rainbow of workers because
• diversity in hiring will help Google connect with its diverse consumer base,
• diversity in hiring will ensure Google has access to all gifted employees,
• diversity in hiring will help Google produce better products,
• diversity in hiring will help Google create more engaged and interesting teams.
Concretely, what is Google doing to diversify the people forming its company? Besides directly hiring a diverse workforce, the company offers a number of scholarships and internships aimed at those historically underrepresented in the technology industry. “Diversity and students,” Google, accessed May 31, 2011, http://www.google.com/diversity/students.html.
Exercise \(4\)
1. In a nutshell, the commonly cited arguments in favor of affirmative action include the following:
• It creates fairness and equal opportunity within organizations.
• It benefits third parties: society as a whole will be more harmonious as discrimination recedes.
• It reduces tensions in an organization.
• It benefits organizations by helping them reach their goals.
• It is compensation for past wrongs.
Which of these arguments appear to stand behind affirmative action at Google? Explain. Are any of the other justifications applicable even though they may not be the reason Google seeks diverse talent?
2. In sweeping terms there are two types of arguments in favor of affirmative action. First, it serves a broad social good by integrating society. Second, companies employing affirmative action do better in the marketplace than those that don’t. If you had to choose one of these as a better and more persuasive argument for affirmative action, which would you choose? Why?
3. At some publicly funded universities, scholarships are, in essence, set aside for minorities. Google privately funds scholarships that are, in essence, set aside for minorities. Taxpayers, in other words, fund one affirmative action endeavor and private investors the other. Now, is one endeavor ethically superior to the other? Why or why not?
4. In a nutshell, the basic arguments against affirmative action include the following:
• It is essentially discrimination, and therefore it reinforces what it combats.
• The best way to eliminate discrimination is to let equal opportunity law, markets, and time do their work.
• It is unfair to minorities who are treated as tokens.
• Forcing organizations to evaluate talent in ways outside of merit diminishes their competitiveness.
• It creates resentment and tensions in an organization.
• It doesn’t compensate past wrongs (because those benefitting and suffering today aren’t those who suffered and benefitted in the past).
Looking at this list, how do you suppose Google CEO Eric Schmidt might argue against each item?
5. With an eye on these arguments against affirmative action, can you make the case that Google’s efforts are ethically reproachable?
6. What does the veil of ignorance test for discrimination? Put yourself under the veil of ignorance. Now, do you believe Google’s hiring policies are ethically good or bad? Why?
Susan Rieger in More Trouble: Madonna Constantine
Source: Photo courtesy of BY-YOUR-⌘, http://www.flickr.com/photos/aparejador/2482604806.
Madonna Constantine is a professor of psychology and education specializing in race studies and prejudice. Growing up as one of five children in a lower-middle-class family in Lafayette, Louisiana, she’d benefitted from parents who never finished college and vowed she would: they saved and scrimped together enough money to get her started at the upper level. Constantine took it from there. She began her remarkable journey at Xavier in New Orleans. Next, she went to the University of Memphis, and then to the University of Texas, and Temple University, and finally to the Ivy League’s prestigious Columbia, where she earned tenure with more than thirty articles authored and published: “Most people may go up for tenure with 15 or 20 articles,” she said. “I figured as a black woman, I needed at least double that.” Elissa Gootman, “Noose Case Puts Focus on a Scholar of Race,” New York Times, October 12, 2007, accessed May 31, 2011, http://www.nytimes.com/2007/10/12/education/12columbia.html?_r=1&pagewanted=all.
As it turned out, the numbers weren’t the whole truth. Constantine had plagiarized significant amounts of her writings from students and another professor. Upon discovering the truth, Columbia fired her. Constantine responded, “I am left to wonder whether a white faculty member would have been treated in such a publicly disrespectful and disparaging manner.” Karen W. Arenson and Elissa Gootman, “Columbia Cites Plagiarism by a Professor,” New York Times, February 21, 2008, accessed May 31, 2011, http://www.nytimes.com/2008/02/21/education/21prof.html.
Next, she sued Columbia for racial discrimination.
Columbia University is having a rough time: Randy Raghavendra, Zenobia White-Farrell, and Madonna Constantine are all suing the traditionally very white institution for color discrimination.
Exercise \(5\)
1. In your own words, and in general terms since there isn’t space here to provide every detail of every case, what would it mean to accuse these people of being victims? What’s the difference between strong and weak victimhood?
2. With the facts provided, create a picture of Madonna Constantine as a victim. What kind of victim would she be? How could that conclusion be supported?
3. Sketch an argument that society as a whole is better off with occasional cases of discrimination than it is with occasional cases of victimhood.
4. Use a utilitarian argument to make the case that even if Columbia’s affirmative action policies are fostering cases of victimization, they should maintain those policies. | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/10%3A_The_Tense_Office-_Discrimination_Victimization_and_Affirmative_Action/10.06%3A_Case_Studies.txt |
Chapter 11 examines the ethics of sex in the marketing world, and discusses issues raised by romance among workmates. Drug use is considered from the side of prevention and in terms of performance enhancement.
11: The Aroused Office - Sex and Drugs at Work
Learning Objectives
1. Consider the ethics of using sex to promote products and services in the marketplace.
2. Investigate the ethics of sleeping with the boss in exchange for professional advancement.
Sex in the Office
That subtitle got your attention. It gets everyone’s attention, which explains why there’s so much of it in the business world. Marketing efforts lead the way because people tend to pay attention to the TV when scantily clad people appear. More broadly, sex happens—either explicitly or just as a suggestion—almost everywhere business does. It’s exploited in the commercials, showing up on the office computer screens, joked about in the bathroom, discussed in the organizational code of conduct, and going on underneath cubicle desks. The economic world is charged with it. Some of the more intense questions about the ethics of sex in the workplace include:
• What’s the ethics of using sex to sell products?
• What’s the ethics of using sex to sell yourself?
• What’s the ethics of looking for sex at work?
Sex Sells
The Russian anchorwoman Svetlana Pesotskaya caused a stir in international media circles when she started doing her reporting topless. Her news program—utterly conventional except for the clothing issue—is called The Naked Truth. One of the broadcast’s more entertaining aspects is watching male guests as they’re being interviewed in the studio heroically trying to keep their eyes above her neckline.
Regardless of the reason viewers tune in for sex-charged information, they certainly do tune in. That fact is not lost on a station closer to home, the CBS affiliate in Cleveland, Ohio: WOIO. In a segment heavily and provocatively advertised by the station beforehand, their news anchor Sharon Reed stripped on air before dashing off to join a throng of temporary nudists participating in an installation by photographer Spencer Tunick, who’s gained international fame by convincing multitudes of men and women to voluntarily pose naked for his fleshy panorama shots.
The reviews of Reed’s participative report were mixed. Don Shelby, an anchor at the CBS affiliate in St. Paul and Minneapolis said, “This threatens to turn us [news broadcasters] into something of a cartoon, if we weren’t already.” David Carr, “When a TV Talking Head Becomes a Talking Body,” New York Times, November 25, 2004, accessed June 1, 2011, http://www.nytimes.com/2004/11/25/arts/television/25tube.html?_r=1. Going further, the chairman of the Radio-Television News Directors Association in Washington, DC, complained, “I think the general reaction in the industry has been one of surprise and disgust. I don’t see how this can engender confidence in the quality of news we think we are doing, and it manages to justify the harsh criticism that we often face in our industry.” David Carr, “When a TV Talking Head Becomes a Talking Body,” New York Times, November 25, 2004, accessed June 1, 2011, http://www.nytimes.com/2004/11/25/arts/television/25tube.html?_r=1.
On the other side, neither WOIO nor Sharon Reed backed down. Station executives insisted that the core story—Tunick’s photography event—was legitimate local news, and the anchor’s participation was analogous to conveying the reality of a flash flood by reporting underneath an umbrella from beside a rushing stream. As for Reed personally, she made no apologies for using her assets to increase ratings for her station and, simultaneously, her own profile in her profession’s arena. “I’m in it to win,” she said. “When did that become a crime?”
That last quote came from the New York Times. The newspaper took advantage of the situation to run its own nude picture of Reed. David Carr, “When a TV Talking Head Becomes a Talking Body,” New York Times, November 25, 2004, accessed June 1, 2011, http://www.nytimes.com/2004/11/25/arts/television/25tube.html?_r=1.
Product Sincerity, Prurience, and Objectification
Ethical issues visible in the Sharon Reed broadcast include product sincerity, prurience, and objectification. Product sincerity measures openness and transparency about what’s being sold. In the case of Reed’s report, there are two front-running possibilities, two clearly distinct products being offered for viewers’ consumption:
1. A news story about a flamboyant picture taker’s visit to Cleveland
2. A video of a woman stripping
Here’s one way to sharpen the question about what’s really going on: Had federal broadcasting rules not allowed the unclothed images, would WOIO still have covered the event, would the station have broadcast a story more or less like the one it did but with the reporter clothed? For its part, the station insists it would have. Further, its basic argument for broadcasting the nude version is clearly reasonable. Both WOIO and Reed remind critics that participating in an event is an excellent way to understand and convey it. That’s why sports reporters pick up bats and try to hit pitched baseballs, and fashion reporters dress in the season’s hot shoes and exhibit them on camera, and war reporters visit the front lines. The fact, consequently, that Reed got involved with her story fits perfectly with the claim that she’s doing the best and most professional job possible of portraying what happened. Still, it’s also probably true that she could’ve uncovered herself without beaming the images across the airwaves. More, the way she took everything off wasn’t exactly discreet. In a moment reminding some viewers of the artistic and historical significance of the disrobed body, and others of a bar with poles, Reed stared intently at the camera as she slowly unsnapped her bra and slipped out of her final clothing layer.
Does it matter? Whether the station was trying to win over viewers with a news story that happened to include nudity, or with nudity that happened to include some news, is there a responsibility for the people at WOIO to be sincere about their strategy? There are solid reasons for affirming that the responsibility is limited.
• Viewers aren’t morons; they know how to change channels. If they see something they don’t like on WOIO, they’re free to try another offering. As long as that’s true, as long as viewers can see for themselves what’s being offered and therefore make their own fully informed decisions, what the broadcaster is claiming diminishes in importance.
• The fact that a product being offered for consumption isn’t what it claims to be is a perfectly understood part of our economic and business world. It goes on all the time and everywhere. Teenagers buying whipped cream chargers (whippets) don’t come to the grocery store because they expect to have pie that night at dinner. The cashier knows why they’re buying the canister, the store owner does too and the manufacturer. Everyone knows, which means there’s no attempt to deceive. It’s true that the canister packaging insists that the product is for use with whipped cream, but that’s not really a lie, just a formality.
Product sincerity, in conclusion, is relative. When people can see for themselves what’s being offered, or everyone knows what’s going on, a lie isn’t really a lie. Or at least the case can be made that it’s not.
Going back to Reed’s story, this much is clear: exactly how her report would be presented was well publicized. Through a massive promotional campaign leading up to the event, the station made sure everyone knew beforehand what was coming. Even accepting the informed consent of the viewers, however, a business ethics that sticks with firm duties—one that orients right and wrong with basic rules about always telling the whole truth—may disapprove of what happened on WOIO. This is the position anchorman Don Shelby took when asked about the infamous report. As Shelby put it, “This threatens to turn us into something of a cartoon.” He meant that Reed’s news broadcast was simply and factually insincere: it claimed to convey important events about the real world, but really offered viewers a piece of ratings-grubbing, skin-flashing entertainment.
In the end, the two guiding questions about product sincerity as they relate to Sharon Reed remain open: Was she telling the truth when asserting that hers was a legitimate news story that rightfully included sex (as opposed to a chance to use sex to boost ratings with the help of a dubious news event)? And does it matter whether she was telling the truth?
Prurience is an immoderate and unwholesome interest or desire, especially related to sex. On this front, the ethical question is simple: is there anything wrong with sitting in front of your TV and watching someone take their clothes off? Anyone who’s watched the Olympics has noticed that beach volleyball gets a little more coverage than the purely athletic competition seems to merit, and some viewers seem more interested in watching the male swimmers stretch on their blocks and prepare to fire into the water than they do in following the actual swimming. People like to look at nice bodies, but where does checking someone out cross into the objectionably unwholesome?
This question is especially well adapted to a community or a cultural ethics, which is a sense of right and wrong that’s not determined by preset rules or viewers’ free choices so much as community standards. What’s right or wrong, from this perspective, is set by a society’s customs and expectations. Swinging this viewpoint around to Sharon Reed’s report, one important aspect is that it was carefully set to air after 10 p.m. when, presumably, children would be tucked away in bed. The station didn’t have any choice in the matter (at least not if it wanted to keep its broadcasting license) because nudity simply isn’t allowed before that time. In the United States, these standards are usually set by the Federal Communications Commission (FCC), which is the national government’s regulatory commission for what can and can’t be shown on open airways. The members of that agency are chosen, ultimately, by elected officials, and those officials, presumably, are in touch with what the public feels is appropriate. The argument can be made here that because a democratically elected government drew the line between the acceptable and the unwholesome at 10 p.m., the line is there. Period.
Refining the point, certain depictions of nudity, degrees of it, and things that happen to go on while people aren’t wearing clothes are limited in similar ways by the FCC, and in all these areas, lines are getting drawn between healthy and immoderate viewer interest. The definition of what counts as prurience, finally, may find an ethical foundation on a community’s verdict about whether it’s happening.
Objectification is dehumanization; it drains away the person inside a body. If you set the reporter Sharon Reed next to a blow-up doll of Sharon Reed, objectification is what happens when you go from the first to the second. The charge or accusation of objectification is that by volunteering to take her clothes off on TV, Reed is violating a moral duty to herself, the duty to protect her own dignity and humanity. As an experienced TV reporter, the professional skills Reed had developed involve the sophisticated ability to investigate, understand, and report on current affairs. There’s a nobility in those cultivated talents, and Reed has a responsibility to herself to promote them. When she takes her clothes off, though, everyone loses sight of what truly makes her an accomplished person. In the same way, those that participate in the nude spectacle—the TV station, the viewers—are violating a duty to her: by sending Reed out there to be ogled, or by doing the ogling, they’re violating their responsibility to see her as an accomplished reporter, and not an empty piece of eye candy. If that’s right, finally, then Reed shouldn’t have taken her clothes off, and viewers shouldn’t have watched if she did.
One strong argument against this duty-based reasoning is that respect for others can be condescending and patronizing. Who are we to tell Reed when she is and isn’t an object? It’s far better to let everyone make their own decisions and respect them for doing so. The case could even be made that Reed’s highest dignity as a human lies precisely in her ability to use and display her body as she chooses. If stripping moves Reed toward accomplishments that will make her happy—if it helps her achieve the success as in her profession—then she shouldn’t be obstructed. From this perspective, telling Reed to keep her clothes on isn’t a respectable ethical recommendation; it’s an insulting attack on her right to go out into the world and find what she wants. Listening to her, it sounds like she may have had this argument in mind when she asserted, “I’m in it to win. When did that become a crime?”
There’s at least one further route to follow in defense of Reed’s disrobing. In the twenty-nine-second advertising segments promoting her presentation, art is heavily featured. It’s steamy art, true, but nonetheless the kind of thing we’re used to seeing in museums. The first shot is a bronze sculpture of three female nudes knotted in a passionate embrace. Next comes a painting on the same subject. Both these shots apparently come from museums. Reed appears in the following scene; it’s a head shot balanced by a partially visible statue of a male nude just to her right. The statue’s visible section is its waist area. Similar juxtapositions lead to a climactic (and blurry) tease of men and women gathering without their clothes to pose for Spencer Tunick’s artistic photos.
Art, the message is, includes bodies. Far from presenting a cheap thrill, Reed is participating in the illustrious history of high and noble aesthetic representation. Everyone will have to decide for themselves whether Spencer Tunick’s panorama shots of naked herds deserve to be called art. But the fact that they could be opens the way to claiming that those stripping down for him aren’t being reduced to pinups; they’re being elevated to one of the higher human callings, which is the thoughtful and provocative depiction of what it means to be human in all its dimensions.
Conclusion. Sex certainly sells. It’s also certain that sexual selling raises ethical questions: is it insincere, unwholesome, or exploitive of the person doing the selling?
Getting on Top to Get Ahead
Some people who are in it to win consider going further than taking their clothes off. “Based on the questions I receive from readers,” writes Huffington Post columnist Joy Chen, “there seems to be a substantial segment of charming, ambitious female blog readers among you who wonder: ‘Should I have sex with my boss to get ahead in my career?’ Perhaps there is an equally large number of good-looking male readers among you who are in the same predicament, but too shy to ask.” Joy Chen, “Should You Have Sex With Your Boss to Get Ahead?,” Huffington Post, May 18, 2010, accessed June 1, 2011, http://www.huffingtonpost.com/joy-chen/should-you-have-sex-with_b_580512.html. No, she answers, and runs through a list of practical reasons why the strategy is flawed.
Regardless of whether sleeping with the boss will help you up the career ladder, the ethics of the strategy divide along a number of lines. The arguments against even trying to convert sex into a promotion start with appeals to honesty and fairness. Granting special favors to a superior—no matter what they may be—almost inevitably requires lying if they’re to be repaid with a promotion or pay raise or some other professional compensation since most organizations require that some kind of internal evaluation justify the selection of one employee instead of others for a move up. The practical reality is that people involved in this kind of relationship are probably going to end up misleading others about what’s really going on. And even if no one asks, the equally fundamental value of fairness gets breached when promotions that supposedly are based on specific job-performance skills end up being distributed in accordance with different motives.
Another, though related, argument against what Chen calls the “sleep-up strategy” emerges from utilitarian theory. Starting with the premise that ethical good is just whatever heightens a society’s general welfare and happiness, it seems as though a world in which everyone is uniformly getting ahead by working hard will be less rancorous and angry than a world where some people are getting ahead through hard work, while others are flying under the radar, suddenly appearing in higher-level posts for reasons that others don’t understand or that don’t conform with expectations. Resentment can grow quickly, as well as charges of capriciousness and unfairness. If the boss happens to be a heterosexual woman, for example, with a taste for sinewy, dark men, and if promotions are doled out as part of pillow talk, then large numbers of workers aren’t even going to have the opportunity to ask just how far they’ll go to get that salary raise. It’s true, of course, that some individuals will benefit when sleeping up occurs. But for the general welfare to be favored, their pleasures are going to need to outweigh quite a bit of workplace frustration.
The third strong ethical argument against sleeping with the boss to get ahead relates to the earlier consideration of disrobing for the camera. If you can make an argument that a news reporter shouldn’t take off clothes to win more viewers because it’s dehumanizing and objectifying, the same reasoning may be transferred with even greater force to taking off the clothes and not stopping there. In both cases, individuals are drained of their professionalism. Within the business world, they sacrifice the judgment and skills that make them what they are as qualified supervisors and laboring employees. When the particular dignity that belongs to those who develop real skills in the economic world is stripped away, what’s left is nothing more than selfish individuals placating immediate and base desires.
One response to this last argument is to deny the premise, which means to dispute the basic assumptions. In this case, denying the premise could mean asserting that skills in the business world aren’t limited to the kinds of things that show up on paper: the number of tasks you’re able to complete each hour, the scores you receive in customer satisfaction surveys, and so on. Business is much broader than that. Like money, it’s everywhere, as broad as life itself. If this is the starting point, it follows that the notion of business skills must be taken to include all that.
Next, if that’s what business skills are, if they’re everything you can bring to bear on the economic world, then sex is going to factor into the mix. It’s going to be something employable just like any other ability. Some people are born with great mathematical minds, and they use the quality to get ahead by finding good engineering jobs guaranteeing high pay. Others are born with tremendous athletic skill. They may use that ability to win a college scholarship and so receive an education that the next person—who’s the same in every other way—won’t be able to access. There are people who have a natural talent for selling and leverage that; others put a sharp visual sense of balance and harmony to use in an interior design company. Sculptors and carpenters turn capable hands into money. If, finally, there’s someone out there with great sex appeal and the ability to use it, why shouldn’t they? Theirs is a talent just like everyone else’s.
Filling this out by reference to ethical theory, there are two kinds of foundations that may be laid underneath the assertion that using bedroom skills to get ahead isn’t any different from dressing for success or staying late at the office. The first is obvious: fairness. If one person can use their skills, then others should be able to use theirs. One response to this argument is that any talent may be used as long as it’s directly relevant to professional responsibilities. Letting people use their erotic skills is only fair, the argument goes, if you happen to be in Amsterdam, a few counties in Nevada, or some other place where prostitution is legal.
The second theoretical foundation for an ethics of sleeping up is the privileging of individual rights and human freedom as the highest values in the workplace. If freedom guides ethics, then constraining the talents that may be used to succeed becomes immoral because it’s a constraint on individual liberty. Freedom, the argument continues, is one of those things you can’t limit: either you let people make their own decisions about getting ahead or you don’t.
The Ethics of Individual Freedom and the Wide-Open Market Economy
The employment of an ethics of freedom to justify the bedroom strategy for career advancement illustrates one reason why proponents of freedom maximization in the economic world frequently set their view of individual rights in tandem with the ideal of an unobstructed market economy.
An unobstructed marketplace is sometimes called a laissez-faire economy (laissez-faire is French for “leave to do”), and it’s one where individuals and organizations compete against each other with minimal regulation, oversight, and limitation. The purchase of trash bags is a decent example. If you buy Glad bags and find they rip when you’re taking the trash out and so leave your kitchen floor stained with coffee grounds, it doesn’t take much effort to go to the store and buy a different brand. On the other hand, trash collection is much less competitive. Especially in those cities where the local government runs the trash trucks, you’re going to find it difficult to change companies if you don’t like the service you’re getting. Now, with respect to the trash bag company, if all the design specialists got their jobs by getting it on with the CEO, no one will be surprised to discover that they don’t know too much about making good bags. This kind of company, therefore, one where professional excellence isn’t rewarded, is probably also one that’ll produce leaking bags and soon go out of business. The marketplace, consequently, does some of the work to professionalize the office that a freedom-based ethics can’t do. Of course, if the marketplace is obstructed—if consumers can’t easily switch from one provider to another, as in the trash collection case—then it’s less likely that experts in sleeping up will be weeded out.
A stronger point can be made. Practices many consider inappropriate, undignified, or reprehensible—like sleeping with the boss to get ahead—may surrender to economic reality more quickly and completely than they do to purely ethical arguments. It’s possible that the best way (the most efficient, practical, and certain) to cure behaviors many label egregious—everything from under-the-table bribes to racial discrimination—is to simply let market forces of competition do their job.
Key Takeaways
• Using sexual images and suggestions for economic reasons raises ethical issues of sincerity, prurience, and objectification.
• Sleeping with the boss for career advancement opens issues concerning the intrinsic nobility of the individual in a business setting and the limits of acceptable strategies for advancement.
• The possibility of sleeping with the boss to advance professionally illustrates one reason rights theorists in the economic world tend to favor market-driven economies.
Exercise \(1\)
1. What—if anything—is wrong with taking off your clothes to earn some money?
2. Is there an ethical difference between stripping for Playboy or Playgirl magazine and Reed’s disrobing? If so, what is it? If not, why are they ethically the same? Use the concepts of prurience and objectification to answer.
3. Your boss wants to sleep with you, and it’s clear that visiting a hotel will help your career. What are two arguments against? What’s an argument in favor?
4. Some ethical theorists believe individual freedom and the pursuit of happiness are the highest ethical values. Why might this kind of theorist also favor wide-open market economies with competition among companies? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/11%3A_The_Aroused_Office_-_Sex_and_Drugs_at_Work/11.01%3A_Is_There_Anything_Special_About_Sex.txt |
Learning Objectives
1. Discuss sexual harassment in its principal contexts.
The Boss Wants to Sleep with You
The flip side of you deciding to sleep with the boss to get ahead is the boss deciding to sleep with you. In ethical terms, however, and in legal ones also, this situation isn’t just a reversed copy of the previous. When the sleep-up strategy begins with some guy or gal having a few drinks and deciding to make a run through the promotion shortcut, the boss can decline. There’ll be some awkward talk and red faces, but a week later the whole thing will probably have evaporated. What happens, though, when the person initiating the deal isn’t so much an opportunist as a predator, and when it’s not so much about making a quick and steamy bargain as it is a continuously leveled demand?
Sexual harassment with respect to the law is defined this way by the US Equal Employment Opportunity Commission (EEOC): “Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitutes sexual harassment when submission to or rejection of this conduct explicitly or implicitly affects an individual’s employment, unreasonably interferes with an individual’s work performance, or creates an intimidating, hostile or offensive work environment.” “Facts about Sexual Harassment,” U.S. Equal Employment Opportunity Commission, last modified June 27, 2002, accessed July 1, 2011, http://www.eeoc.gov/facts/fs-sex.html.
The clichéd image of sexual harassment—which may have gotten to be the cliché by being the most accurate and common—is of a middle-age man hiring and hitting on the nubile account executive. She gets the message pretty quickly about exactly why she was selected for the job, and what she’s going to need to do to keep it or advance upward. Whether that’s the most typical scenario or not, both legal and ethical considerations of the issue account for varied exploitation scenarios: harassment can work against diverse people in multiple ways. According to the EEOC statement,
• The victim as well as the harasser may be a woman or a man. The victim does not have to be of the opposite sex.
• The harasser can be the victim’s supervisor, an agent of the employer, a supervisor in another area, a coworker, or a nonemployee.
• The victim does not have to be the person harassed but could be anyone affected by the offensive conduct.
• Unlawful sexual harassment may occur without economic injury to the victim.
• The harasser’s conduct must be unwelcome. “Facts about Sexual Harassment,” U.S. Equal Employment Opportunity Commission, last modified June 27, 2002, accessed July 1, 2011, http://www.eeoc.gov/facts/fs-sex.html.
A number of ambiguities knot attempts to deal with harassment in the courts. Starting with the term sexual advances, everyone knows from their own experience that someone standing fifty yards off and staring can be tremendously disconcerting, while someone else rushing up, draping themselves over us, and sighing, “You’re hot!” can be a funny joke. It’s hard to set down in words exactly what an advance is. Similar uncertainties plague attempts to define just what constitutes the unwelcome part of unwelcome advances because, again, different individuals have very distinct ways of feeling and expressing displeasure.
On the other end, even if the advance is clear, and even if it’s clearly unwelcome, when do accumulated come-ons add up to a hostile work environment? In some situations, people will feel pressured months after a single polite invitation to dinner has been firmly refused, while in other places the boss’s daily proposal to “Get blind drunk together and see what happens” will seem more absurd than threatening. None of this changes the fact that the law’s intention is clear. People aren’t allowed to make sex an employment requirement or contaminate the workplace by acting like it’s a singles’ bar. Anyone who breaks those rules may be subject to prosecution, especially if the behavior is persistent and continues even after discomfort has been explicitly reported.
How is the gap between a clear legal intention and a messy real world bridged? Courts have sought to alleviate the problem of different people seeing things in different ways with a reasonable person model. The basic questions at the core of harassment cases—“Is it an unwanted sexual advance?” and “Is it a hostile work environment?”—are answered, as far as the law is concerned, by the response a reasonable person would give if informed of the situation. Of course, reasonable people once believed the earth was flat, so it’s not clear that the reasonable person definition will entirely withstand the tremendous variety of situations in which people come together. Still, the model certainly advances the discussion. The fact that any accusation of harassment, or any defense in the face of an accusation, must pass through the test does wring out extreme cases. The accuser who complains that the boss once winked, or the boss who claims not to have realized that advances were unwelcome even after receiving a glass of ice water in the lap, probably won’t get much sympathy in the eyes of a judge.
Sex, Harassment, and Ethics
Sexual harassment is difficult to justify, and easy to condemn, with nearly all mainstream ethical theories.
• The general welfare, most agree, is well served by a workplace where everyone can work, where labor can be done without the impediments of annoying and molesting come-ons. There are other spots and times that are designated for romantic socializing, and in general, we all get along most harmoniously when we keep our various activities in the places they’re expected to be. Exceptions exist, but looking at the situation broadly, utilitarianism—which sets the general welfare as the highest good—comes down against overly aggressive advances at work.
• More individualistic and liberty-oriented ethics that privilege freedom and each person’s unique expression and aspirations as the guiding ideal for action will likely agree that a workplace plagued by harassment is one where individuals’ freedom to pursue their own hopes and careers is being significantly impeded. The harasser, of course, can always insist that he or she is free to toss out as many blunt invitations as he or she may choose, but it must be remembered that all freedom-based theories restrict us to actions that don’t limit the freedom of others.
• Basic duty theory, which orients ethics in the workplace around the specific imperative to honesty, also rejects harassment because no sane boss is going to admit to it. Harassment, in other words, will likely lead to lying. Along the same lines, the duty to fidelity (keeping our promises) also prohibits harassment assuming the original working agreement was about work and not romance. Finally, the duty to respect others as dignified human beings—worthy of being treated as ends and not means—leaves little room for hostile workplaces.
An ethical review of workplace sexual harassment shows that the practice is difficult to justify. Similar confidence can be attached to a related subject: victimization. Victimhood, in its extreme form, is falsely claiming to suffer harassment as a way of injuring another, very likely a supervisor. Since the accusation is a lie, it will, in most cases, fail an ethical review. Also in terms of the utilitarian principle of the greatest good, it’s probable that society won’t be benefited by people flinging false accusations of sex harassment. In general, the ethical difficulties surrounding victimhood are practical. They surround this question: how can individuals be protected against retributive and false claims of harassment without making the accusation impossible to level?
Probably the most interesting—and conflictive—ground for the subject of sexual advances in the office is the intercultural workplace: situations where employees from distinct nations with divergent customs and habits are asked to work together.
Academic studies have carefully shown how cultural differences affect attitudes about sex, sexual advances, and hostility at work. In one study, American, Australian, and German collegians were offered written scenarios of sexual overtures in offices. Responses from all three nationalities were similar, but as a group, they were far more likely to brand the episodes with terms like harassment than were their peers from Brazil. Faced with the same scenarios, the Brazilians tended to see only innocuous pokes at romance and sex that didn’t constitute abuse of power or create a hostile environment. A similar experiment showed a comparable split between typical adults living in the United States (more prone to see harassment) and Ecuador (more likely to see scenarios as flirtatious or harmless sexual jousting). Jennifer Zimbroff, “Cultural Differences in Perceptions of and Responses to Sexual Harassment,” Duke Journal of Gender Law and Policy (2007): 1311, accessed June 1, 2011, www.law.duke.edu/shell/cite.pl?14+Duke+J.+Gender+L.+&+ Pol%27y+1311; E. R DeSouza and C. S. Hutz, “Reactions to Refusals of Sexual Advances among U.S. and Brazilian Men and Women,” Sex Roles 34, nos. 7–8 (1996): 549–65.
Researchers speculate that the distinct responses to the situations don’t indicate superficial differences of opinion, or divergences in local laws, but go much deeper into sweeping ways people understand sex and socializing and men and women together. South American culture is generally more eroticized, more tolerant of displays of nudity, and more accepting of raw gestures toward sex. Of course you can’t miss how much more comfortable men and women are with their displayed bodies if you visit Carnaval in Brazil, but it goes beyond that. Something simple—a comment asserting that the workday passes more agreeably when the woman a few cubicles down wears one of her shorter skirts—comes off very differently in South America (where few would object) than the United States (where just citing the example will make some people wince). The expectations, acceptance, and enjoyment surrounding sex and suggestion at work, the conclusion is, aren’t any different from the rules governing which side of the street you drive on, or how much can be revealed at the beach; they’re different at different places.Eros R. DeSouza, “Gender Differences in the Interpretation of Social-Sexual Behavior: A Cross-Cultural Perspective on Sexual Harassment,” Journal of Cross-Cultural Psychology, September 1, 1997.
Cultural differences don’t make much difference as long as cultural places remain fixed. But in a world of multinational corporations and falling trade barriers, large organizations (and small ones too) are going to explore international markets. Mixed nationalities in the office are going to follow. Then what? What happens if an American TV station, impressed by the rating-busting success of Russian Sergei Moskvin—the producer behind the topless news program, Naked Truth—invites him to come to America? No one should be too surprised if Moskvin spends the first day in the office bouncing around asking female reporters to give him a waist-up look. And no one should be too surprised if one, a few, or all of the reporters (including the men) protest and maybe file a lawsuit. In ethical terms, there are a number of strategies for resolving these clashes of expectations and customs. In general, they divide into two groups:
1. Those working from a culturalist ethical perspective
2. Those planted in one of the traditional approaches
Office Sex from a Culturalist Perspective
A culturalist ethics defines right and wrong as simply aligning with a society’s accepted rules and norms for behavior. For example, in the States we consider ownership of land that we’ve legally purchased to be legitimately ours; part of what we morally owe each other is respect for possessions. According to the customs and traditions practiced by indigenous peoples in southern Mexico, however, the very idea of private land is immoral. All land, in the ethical sense, belongs to everyone, which explains why the plots used for farming are divided and redivided each year in accord with the dictates of the village chief or consul. So which society is right? Should possession of a plot be determined by a deed or by the chief’s voice? According to a culturalist ethics, either one. It just depends on where you happen to be when the decision gets made. Wherever you are, if you decide in accordance with local customs and traditions, you’re right.
Moving this over to the issue of harassment, the answer to the question “What’s an unwelcome sexual advance?” isn’t answered by recourse to specific dos and don’ts; it’s simply the common practice and expectations of those making up the larger culture where the business is located. If repeatedly making suggestive comments about how much better the day feels when the woman down the row is short-skirted counts as a hostile work environment in the United States, then it is a hostile one. If the same tone and words are accepted as perfectly normal and appropriate in Brazil, then they are appropriate. No further ethical discussion is required.
Departing from this origin, there are two main resolutions to sex problems coming up in international offices:
1. The “When in Rome…” solution (or local deference ethical strategy) accepts the basic culturalist argument that right and wrong is nothing more than the customs and habits of those forming a society. People joining that society (like Sergei Moskvin coming to America) can expect a kind of grace period while they figure things out, but they must ultimately come into line with local practices. Moskvin will be excused, in other words, for asking women to take off their shirts, but only for the first few days.
Expecting others to adapt to local customs is a reasonable way to manage intercultural ethical conflicts, and it works well for those receiving workers from other places. The catch is that the same logic works the other way. If an American multinational media company expands into the Russian market, then the local partners are going to be standing on solid ground when they begin asking for a level of exposure—female, male, both, or whatever—that doesn’t sit well in the United States. In this kind of situation, employees sent abroad will naturally be uneasy about expectations. Probably some will embrace the change with a sense of adventure while others will recoil, but regardless of the attitude, everyone will probably find themselves in at least a few uncomfortable situations. As for the larger organization trying to hold a business together while spanning various nations and cultures, this is an incurable difficulty with simply accepting local ethics. The resulting ethical schizophrenia—rules within an organization switching as fast as employees are assigned to one or another country—makes setting a specific and coherent corporate culture in the area of sex almost impossible.
2. The multicultural respect ethical strategy also accepts the basic culturalist argument that right and wrong are defined mainly by the customs and habits of those forming a society. In this case, however, people moving to other places aren’t expected to adapt. Those others are expected to accept. When, for example, people from other places come to America, basic respect for the autonomous value and dignity of their customs and habits demands that their behavior be tolerated, even if it gives offense to many locals. In the case of Sergei Moskvin, people in the office will just have to deal with the fact that for him there’s not a big difference between exposing one’s face to the camera and one’s chest.
This respectful response to intercultural ethical conflict is reasonable, even laudable for its tolerance of diversity. The problem, however, underlying the “When in Rome…” strategy continues within a context of multicultural respect: it leaves organizations in an impossible situation when it comes to formalizing policies and procedures governing all those working in all the international offices.
Office Sex from a Traditional Perspective
Most traditional ethical theories approach the multicultural workplace more objectively. They insist that the moral rules of right and wrong transcend cultural diversity, and so open the way to claiming that certain behaviors are acceptable, and others unacceptable, no matter where the workplace happens to be or what countries the employees call home. The Russian news producer Sergei Moskvin plays by the same rules as the Ohio anchorwoman Sharon Reed, and that goes whether they’re in Russia, Ohio, or anywhere else.
The traditional approaches—especially duty theory and rights-based thought—work together fairly well in the areas of sexual innuendo, advances, and harassment: the actions they recommend can be construed to more or less fall in line with standard practices in America and Europe (which, not surprisingly, are also centers of the theories’ historical development and interpretation). That clears the way to affirming that those who come to the United States to work will need to adapt their behavior dealing with sex in the office to something resembling the codes of conduct normally in place here. More, organizations opening offices overseas will also implement those codes because the codes’ justification rests on arguments that function independently of local habits.
One clear advantage to this solution to questions about sexual advances in the office is that it allows more or less uniform regulations for conduct, no matter who happens to be working, or where they happen to be. The main problem, however, with this solution is that it breeds accusations of insensitivity to other cultures and customs. More broadly, American attitudes about sex in the workplace—when they’re forced on those who work for American multinationals in other countries—lead to charges of cultural imperialism.
In the economic world, cultural imperialism, which fits besides terms like the ugly American and globalization, is the charge that US companies are imposing attitudes on local populations, imposing on people with different histories and customs who value and want to preserve their different ways of being—and getting—together.
Key Takeaways
• Sexual harassment occurs when unwelcome sexual advances or conduct creates a hostile work environment.
• Because sexual language is frequently suggestive more than explicit, and because diverse individuals relate to their own sexuality in distinct ways, it’s very difficult to form explicit rules defining sexual harassment.
• Sexual behavior is culturally diverse, leading to problems in workplaces with international participants.
Exercise \(1\)
1. In your own words, what is sexual harassment?
2. Sketch two ethical arguments against sex harassment in the workplace.
3. Why might cultural diversity create sexual conflicts in an office?
4. What is the multicultural respect response to sexual tensions in an international office?
5. Why might a multinational corporation’s policy dealing with sexual issues seem sensible in the United States but be viewed with hatred by employees in overseas offices? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/11%3A_The_Aroused_Office_-_Sex_and_Drugs_at_Work/11.02%3A_Bad_Sex-_Harassment.txt |
Learning Objectives
1. Define workplace drugs.
2. Review recent history of social attitudes toward drugs.
3. Consider problems caused by drugs at work and the reasons for their use.
4. Discuss the ethics of drug testing.
Rehab
Amy Winehouse’s chart-topping, Grammy-winning song “Rehab” is an old-fashioned piece of rock-and-roll defiance:
They tried to make me go to rehab
I said no, no, no
I ain’t got the time
I won’t go, go, go -Amy Winehouse, “Rehab,” Back to Black (Island Records, 2010), audio CD.
It’s also a statement about drugs in the workplace, and a very impacting one when the workplace is a concert hall and the worker standing up in front singing is collapsing under the weight of abuse, falling out of her clothes, tripping across the stage, forgetting the lyrics. Winehouse’s picture is all over the Internet with cocaine dabbing her nose. She’s been filmed inhaling crack. When people notice that her arms are laced with cuts, she explains that she knives herself during withdrawals as a distraction from the aching need for another drink or shot or whatever. Still, she sings that she’s not going to “go, go, go,” and everyone out in the crowd sings it right along with her.
Where’s the line? Does it get crossed when she finally gets to the point where she can’t walk out on stage? Or will the line get drawn when people stop paying money to watch her sing and the profits dry up? Or maybe there is no line, maybe she means what she sings and there won’t be any stopping. And no matter where the line is, who decides? Is it her equally distraught, on-and-off husband? Her manager, her record label, her fans? No one at all except Amy Winehouse?
Sooner or later her story is going to end badly, but the questions will keep getting asked because drugs lace so deeply through professional lives. In most offices the boost comes from coffee, Red Bull, antidepression pills, or the prescription amphetamine Ritalin (which, to complete the ladder, is used to cut cocaine). Then there are the relaxers, the cigarettes, the gin tonic, the Valium. In between, there’s a broad and colorful spectrum of chemicals that help people go to work, do their work, and get away from work. Some athletes—or just guys wanting to fill out a suit—are using steroids. Others respond to the stress of the workday with high blood pressure or similar, and there are drugs for that too.
The ethics of drugs at work starts with a straightforward question, and then divides into two areas of debate. The question is “What counts as a drug?” The two areas of debate are the following:
1. What should happen when a worker wants to use drugs or alcohol, and that goes against an employer’s policy and wishes?
2. What should happen when the organization doesn’t intervene in a worker’s drug use, or actually encourages it because the organization benefits from the use?
What Is a Drug?
The technical definition of a drug is a substance affecting the structure or function of the body or of one’s consciousness. When discussed in business ethics, only a slice of the broad category is applicable. The subject here isn’t diabetes medications and similar doctor-prescribed substances; the dosing under consideration is recreational drugs and those substances taken to improve performance temporarily, but that don’t seem medically necessary and that may not be medically desirable, especially because they cause negative effects further down the line. Steroids are an easy example.
In the area of business ethics and drugs, it can be stated that, loosely, a drug means a substance providing a temporary and artificially desirable state, one followed by a comedown or a reversal to a level below the original condition. Under this definition, the reason a Red Bull is a drug and, say, taking a nap isn’t is that while both provide some good working hours, Red Bull eventually leaves you even more tired than when you started. It comes with a letdown not affecting those who choose a nap. Something similar, but over a longer term, happens to those who use cigarettes to tighten their concentration. For many, nicotine works; it helps get work done. Later, however, when you try to kick the habit, it’ll be hard to concentrate on anything at all for months. What, finally, makes a drug a drug is that in essence it’s something that lets you borrow against the future.
A Brief History of Drugs (with Lessons That Could Be Applied to Sex)
One warning should be inserted before any ethical consideration of drugs, sex, and similar themes in the workplace: both the legal rules as well as social attitudes are subject to change over time. The fact that rules can change doesn’t mean they will or should, but simple prudence demands that anyone trying to form a justifiable position in any particular ethical situation should be aware of how significantly society’s broad view of the subject can transform in relatively short periods.
The way we think about almost everything evolves, but the case of attitudes toward alcohol, marijuana, and similar substances go beyond gradual developing: they can turn so abruptly that they fall into the category of social paradigm shifts. The word paradigm (from the Greek word paradeigma) could be translated as “pattern.” Think of it as a pattern of thought or a pattern of processing things. More than an attitude, a paradigm is a worldview, an almost instinctual way of seeing and understanding experience. A paradigm shift is a change in the way we perceive things as we try to understand them.
As an abstract example, you’ve seen three-dimensional boxes drawn on paper with just a set of twelve lines. You look, and one face seems to be in front and the other behind. But when you blink, the box seems to have shifted and reversed: now the front is the back and the back is front. Called a Necker Cube, this experience of certain things in the world that make perfect sense even when seen in opposed ways is analogous to a social paradigm shift. In both cases, something is out there, and all of a sudden we see it in an entirely different but equally true way. Another, more human example, of a paradigmatic shift has been lived by all of us when as boys and girls we passed through puberty. Suddenly, and almost inexplicably, the way most of us saw members of the opposite sex was different. As it happens, this adolescent shift is based on biological transformations, but the cause can be anything. What’s important is that fundamental views modify very quickly, and over the course of the 1980s in America, fundamental views about drugs in the workplace modified significantly and fast.
In 1981, an American military jet crashed while trying to land on the USS Nimitz, an aircraft carrier. Numerous crew members were killed. Subsequent tests showed some were high on marijuana. That worrisome result—along with the suspicion that drugs may have contributed to the accident—provoked testing of soldiers across the armed services. Positive results were startlingly high. Quickly, zero-tolerance policies were imposed within the military. Soon, the restrictions spread to the civilian side of the federal government. By 1988, the Drug-Free Workplace Act had been promulgated; it required that most companies doing business with the government certify that they maintained a drug-free workplace. More, federal contractors were asked to publish a policy explicitly prohibiting the use and distribution of unlawful drugs at work, and also institute a drug awareness program emphasizing the potential dangers of substance abuse. Soon, even businesses not engaged with the government were customarily advertising themselves as drug-free workplaces.
None of this seems remarkable now, but it would have seemed so in 1976 when then-presidential candidate Jimmy Carter campaigned in favor of decriminalizing marijuana use and his leading expert on illicit drugs believed that cocaine wasn’t a serious public health threat. At the time, Dr. Robert DuPont was head of the National Institute of Drug Abuse, and he too supported marijuana decriminalization (though he later changed his mind after learning that thirteen-year-olds in suburban neighborhoods like his own were passing around joints at their birthday parties). While tolerance dominated political attitudes toward drugs, the media was busy glamorizing them, especially cocaine. A widely read article informed Americans that “among hostesses in the smart sets of Los Angeles and New York, a little cocaine, like Dom Perignon and Beluga caviar, is now de rigueur at dinners. Some partygivers pass it around along with the canapés on silver trays…the user experiences a feeling of potency, of confidence, of energy.” “Thirty Years of America’s Drug War: A Chronology,” PBS, Frontline, accessed June 1, 2011, http://www.pbs.org/wgbh/pages/frontline/shows/drugs/cron/.
It seems like that must have been a long time ago. It’s not, though—only a few decades. And there’s no reason to believe we won’t see similar shifting in the coming years; we just don’t know what will change and which way it’ll go. Regardless, the lesson for business ethics is simple and applies whether the subject is drugs or sexual advances or whatever in the workplace. It’s that the broadly accepted rules and social attitudes should be handled—and relied on—with care.
What’s Wrong with Drugs at Work?
The most commonly discussed issue in the area of drugs and work involves the organization’s interest in promoting and enforcing a drug-free workplace. Of course space is made for coffee. It’s true that the drink can leave people irritable and aggressive, but the effects are mild and since almost everyone uses it, there’s not much to do by way of dissuasion anyway. And pushing into the slightly stronger stuff, most organizations accept the occasional wine and beer shindig in the office corridors on Friday afternoons to loosen the atmosphere a bit. For the most part, however, companies want their workers straight for two reasons: productivity and safety.
A study published in the Journal of the American Medical Association (JAMA) asserted that postal workers testing positive for illegal drugs (typically marijuana and similar) were significantly more likely to be fired, injured, disciplined, or absent than their nonusing peers. Craig Zwerling, James Ryan, and Endel John Orav, “The Efficacy of Preemployment Drug Screening for Marijuana and Cocaine in Predicting Employment Outcome,” Journal of the American Medical Association 264, no. 20 (1990): 2639–643, doi:10.1001/jama.1990.03450200047029. Study quoted in William Shaw, Moral Issues in Business, 10th ed. (Belmont: Thomson Higher Education, 2007), 335. If that study accurately represents reality, then companies stand on firm ground when arguing that because they have a right to expect a full day’s good work for a full day’s pay, they can demand that employees be drug free. If they’re not, the argument goes, the statistics indicate that they’re less productive. And if they’re absent, then their coworkers who count on them being there may end up being less productive also. Drug use, finally, becomes an ethical breach of the duty to fidelity. It violates the responsibility employees have to honor their commitments to employers.
Moving in a slightly different direction, all public companies hold responsibilities to their shareholders. They include, in most cases, the obligation to make a profit—and to make as large a profit as possible within the parameters of normal business practice. That obligation may well go unfulfilled, however, if a workplace is not drug free. Because companies frequently pay health insurance premiums for their employees, workplace injuries climbing in number and severity resulting from drug use ultimately add to the firm’s operating costs. And these subtract from the annual profit.
The stakes rise as occupations become more prone to accidents affecting those outside the company or organization. While a walking mailman probably can’t do too much damage to others no matter how many swigs he takes from his hip flask, a crane operator, a school bus driver, an airplane pilot, a technician at a nuclear power plant, all these kinds of posts demand that employers take aggressive steps to ensure workers are well suited to carry out their duties. If they’re impaired and make mistakes, there’s no telling who or how many may suffer. What’s certain is that lawyers will chase to the scene of any accident fitting those characteristics. As the punitive lawsuits pile up, the catastrophic accident caused by drug use will probably turn out to be a financial disaster for the company. It will also be an ethical nightmare. Assuming the drug use causing the accident was preventable—a more scrupulous and sternly applied policy would’ve cleaned out the workplace and so avoided the accident—all the major ethical theories produce condemnation:
• The duty to avoid harming others is broken.
• The utilitarian imperative to serve the general welfare is breached.
• The right to individual freedom of the accident’s victims gets jeopardized or destroyed.
Summarizing, the following concerns lead to policies within most organizations—as well as concrete actions—aiming to control how employees treat their mind and bodies:
• Drugged employees can be less productive.
• Employees using drugs can cause others to be less productive.
• Medical insurance and other costs elevate as drug use rises.
• Risks to third parties increase with drug use.
Against these powerful arguments in favor of limiting or eliminating drugs in the workplace, individuals naturally chafe at demands made by their employer that go beyond specific job tasks. Many of them figure that they’re paid to do a job, and as long as they’re doing it, the boss ought to leave them alone. While it’s clear that the Amy Winehouse situation is an extreme one, it’s also quite typical in terms of its basic structure. On one side, the people writing her paycheck want her getting to the workplace on time and then performing well. They want her remembering the lyrics and they’d prefer that she not fall off the stage. She, on the other hand, wants to enjoy her leisure time as she pleases, and she’d prefer that others just leave her to do her work in the way she sees fit.
Drug Tests: Actions by the Organization to Stop Drug Use
From the management’s side, a number of actions may be taken to diminish drug use in the workplace. Most are noncontroversial. Just like cigarette boxes come with dire warnings, so too company policy handbooks and employee bulletin boards are used to underline the potentially negative effects of use and abuse. More positively, drug-free lifestyles may be encouraged through an organizational culture stressing healthy choices. Special bonuses may be given to those who quit smoking (or certain privileges may be denied to those who don’t). Possibly, a gym membership will be included with a standard contract. Biking to work may be encouraged (the advertising agency Crispin Porter Bogusky has a bike repair shop right in its offices). More incentives could be added but, in general, steps organizations take to encourage physically healthy lives receive little resistance and do, at least indirectly, discourage substance abuse.
With increasing frequency, intrusive steps are also being taken to separate drugs from work. Drugs tests are the most notable. Over the course of the last decade, scientific advances have made these probes easier to administer and less expensive to apply. That, combined with hardening attitudes about drugs in society and at work, has led to increasingly frequent testing. The checks are applied to filter new employees and also (though less frequently) to guarantee the condition of those already on the payroll.
This testing is a controversial practice both legally and ethically. There is agreement on one point: no one can be forced to take a drug test. At least with respect to work-related activities (as opposed to police-related events including drunk driving), any employee is always free to say no, to quit, and leave. Within the business world, all drug testing must be consensual. Informed consent is an employee agreeing to undergo a drug test (or a series of them, or at least be open to possible testing) only after fully understanding the reason the organization is asking for the test, what is being tested for, and knowing—fully—the extent to which he or she may refuse. Beyond simply having information, informed consent also implies deliberation. In a complicated situation, few are able to make good decisions instantly; typically, sleeping on a question or something similar is necessary for an individual to feel as though he or she may consent to a test in a confident and informed way. Finally, consent must be voluntary in the sense that those agreeing to it understand what pressures are operating to encourage one or another decision. Naturally, people are going to feel a variety of tugs and pulls (from peers, from a union or civil rights organization, from management) to make a certain decision. For the decisions to be voluntary, those pressures must be understood and accounted for. Basically, informed consent means those subjected to the test can’t be railroaded.
In some fields, refusal to submit may lead to termination (commercial airline pilot). In others where an employer has no health-connected reason to seek a test, and no reason to suspect that drug use or abuse is occurring, the employee should know that refusal can be an option, both legally and ethically.
Legality and Types of Drug Tests
Legally, the question about the employee’s right to say no to testing is a moving target. Currently, the federal government and most states allow drug screening as part of the hiring process and generally allow tests on existing employees as a condition for continued employment if there’s reasonable ground for suspicion of use. Grounds for suspicion include slurring words, acting disoriented, seeming unfocused, and similar. Most college students have a pretty good idea. Some states, including Minnesota, allow tests to be performed on random employees even without cause for suspicion. In this case, advance notice is required of the random test process.
As for the kinds of tests that are applied, urine is common. Obviously, bosses sniffing alcohol on the breath is a functioning, though unscientific, check. Saliva can be analyzed. Because traces of drugs remain detectable in hair for much longer than urine (about three months versus three days) and because it’s easy to clip a few strands, this type of drug test is not uncommon.
Ethics of Drug Tests
Ethically, justifications for drug tests rest on the legitimate reasons organizations have for wanting to weed out users from the workforce: drugged employees can be less productive, and cause others to be less productive, and use may raise operating costs as well as pose risks to third parties. The linchpin argument is that these concerns give organizations a right—and also a responsibility—to do all they can to create drug-free workplaces. Tests serve that obligation. Because they’re a reasonable way to keep worker performance up, operating costs down, and everyone as safe as possible, employers have a responsibility to apply them.
Critics of drug testing also muster strong arguments. Most rest on convictions relating to individual dignity and rights. Putting their argument into the largest perspective, it’s simply a fact that if, as a society, we decided to rid ourselves of all cocaine use, we could do that in a week. We’d only need to legislate that every single citizen would visit a government office every single morning and pee in a cup. Positive results would trigger an automatic jail sentence. Cocaine—along with its accompanying problems—would disappear in little more time than it takes to broadcast a just-say-no TV ad.
No one advocates this truly zero-tolerance enforcement strategy, however. The central reason no one proposes total testing is that basic convictions concerning human rights provide two direct forms of protection. First, our intrinsic dignity as individuals guarantees some measure of privacy. Privacy is the right to be left alone by others, to conceal ourselves from their prying eyes. What we do inside our own homes and with our own time is our—and no one else’s—business.
This right to a dignified space for me stands on its own, but also extends as the right to define my own unique identity for myself. If everything we think and do is seen by others (imagine your life filmed and broadcast on TV twenty-four hours a day), then we no longer have a self. All our energy and time would get devoted to presenting an image and appearance for others. Privacy is the space each of us needs to create ourselves as who we are. Drug testing finally, insofar as it intrudes on our private reality, also intrudes on the right each of us has to be ourselves.
The right to privacy can be construed slightly differently in terms of humiliation and exposure. Being forced to pee in a cup is embarrassing; it’s being treated like a farm animal. On this front, the right to privacy is the guarantee that certain private things like that won’t intersect with anyone else unless we make that decision ourselves. The other articulation, exposure, is especially pertinent today. In an electronic world, personal information about ourselves, once it’s tapped into a computer, can end up anywhere at any time. In the end, who knows who’s going to get their hands on our lab results? Or when? Because it could be anyone into the indefinite future, there’s an element of invasive exposure in many drug-testing procedures.
The same fundamental rights that protect privacy also guarantee freedom—the right to pursue our own happiness in the ways we as individuals determine. Of course this right gets suspended the second our drug use ruins someone else’s freedom by injuring them in a car wreck, but until then, drug tests are going to appear as a violation of fundamental liberty. According to this argument, the reason we’re out in the economic world to begin with, the reason we’re going to work and earning money, is precisely to allow us to pursue our happiness in the ways we choose (by providing shelter, some drinks on Friday night, the occasional gift for the ones we love, opportunities for our children, and similar). If, finally, the reason we go to work is to have and express our freedom, and the first thing we do when we get to work is accept the imposition of a drug test designed to find out exactly what we were smoking Friday night, then the entire point of going to work in the first place is undermined.
Besides the privacy and freedom arguments against drug testing, there’s also a slippery slope concern. A slippery slope is the idea that once you start doing something, it’ll be difficult to stop doing more and more of it. Start with the proposal that random drug testing will be performed in a workplace once a month on one employee, and the sample will be tested only for some hard drug, say, heroin. For most people in most offices, that doesn’t sound very threatening, and even though it may be a violation of basic rights, some will be tempted to simply accept the measure because, really, it’s not that big a deal, not worth a fight. So the program is implemented. A few months later, the proposal comes down to test not one, but two employees every month. Again, not a big deal and no one objects. Then the test gets expanded to check for cocaine. You see where this is going. The process repeats and, in the end, everyone’s getting tested all the time for everything. The slippery slope argument against drug testing in the workplace is that individual liberties are so important that they must be entirely protected from the very beginning. Stated slightly differently, rights can’t be done halfway. You either have and protect them, or you don’t. If that’s persuasive, then everyone should band together against drug testing, even those who’ve never had a drink or smoke in their lives.
A fourth argument against drug testing is about half ethical, half technical. It concerns drug test reliability. Even top-notch manufacturers concede that their products produce false positives in some very infrequent cases. A 1 percent error rate seems, on the face of it, acceptable, but if you personally happen to be that 1 percent, your perspective may change. Of course, to a certain extent this objection can be answered by technical advances: if a 1 percent error rate is too high, the product can be improved and now it’s 0.1 percent or 0.01 percent. Probably, however, there’ll always be some possibility of error, and as long as there is, the argument remains that the ethical cost of misidentifying a clean worker as a user outweighs the benefits accrued from correctly identifying those who really are using.
Finally, in the face of the organization’s justifiable desire to impose drug tests, the arguments against accepting testing are:
• The right to privacy
• The right to freedom
• Slippery slope concerns
• Imperfect testing
Key Takeaways
• In the workplace, the term drugs may be used to denote a substance affecting the mind or body in a temporary and artificially positive way.
• Social attitudes toward drugs in the workplace have altered very rapidly over the previous decades and may (or may not) continue to change.
• Drug use at work can enhance performance.
• Drug use at work can lead to less productive employees, higher costs of doing business, and risks to third parties.
• Drug testing at work pits the employer’s legitimate interest in maximizing worker performance against individual rights to privacy and freedom.
Exercise \(1\)
1. What is a social paradigm shift?
2. What are some legal substances that count as a drug at work? What are some illegal ones?
3. What are some reasons an employee may want to use drugs at work?
4. Justify in ethical terms the application of drug tests to employees of the aircraft maker Boeing.
5. Describe two distinct reasons why someone who has never used a drug in his or her life might refuse a test at work. Convert those reasons into well-founded ethical arguments. | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/11%3A_The_Aroused_Office_-_Sex_and_Drugs_at_Work/11.03%3A_Drugged.txt |
Learning Objectives
1. Examine the ethics of organizations facilitating drug use by employees.
When Drugs and the Workplace Mix
The conflict between organizations demanding drug-free workplaces (and testing to be sure they get them) and individual rights to privacy and freedom center most discussions of drugs at work. There’s another area of debate, however. What happens when your employer wants you to use drugs?
Take the case of Amy Winehouse. Everyone interested in music—and many who aren’t—know all about her. Every time she gets photographed inhaling something that looks illegal or gets videoed tripping out of a party with her dress slipping down her chest, the images, the sound, and the story race across TV channels and the social web and she’s back in circulation. People talk, remember her songs, ask if she’s got anything new coming out, and wonder when she’ll bring her notorious road show to their town. Anyone who didn’t know better would be tempted to suspect that the whole thing was fake, a giant scam dreamed up by a genius publicist to get Winehouse all the free attention today’s connected world can generate.
Pop stars tend to have short shelf lives and long lists of people making money off their fame. Those on the periphery of Winehouse’s success—her managers and promoters and publicists and lawyers and accountants—all know that she probably won’t be providing their income for long, and it’s in their financial interest to maximize what she can give while she still can. Will her body and life suffer from her cocaine use? Yes, but most of that damage probably won’t register until after the flow of money she’s producing has slowed to a trickle. Given that reality, her corporate sponsors have little professional reason to want to intervene in her life to help her slow down the intake. Just the opposite, actually.
Something similar occurs in the world of professional sports. Anyone who’s watched professional football or soccer players has witnessed this scene: the athlete down and writhing on the field, clutching frantically at a knee or ankle. Teammates slink away, concerned about their companion but also thanking God it wasn’t them. Trainers hurry onto the field. Commercials interrupt the drama. TV returns and the game goes on. Then, five minutes later, he’s back like nothing happened. Commentators approvingly acknowledge the guy’s toughness. Advertisers are relieved because viewers stay fixed to the screen. The team owners in their box are happy to be getting their money’s worth from their employees. For every one of them, drugs and the workplace are an excellent mix.
The Ethics of Drugging Employees
There are two broad categories of organizationally sanctioned employee drug abuse. The first is the employee doing it, and managers don’t get in their way. The second category belongs to those organizations actively encouraging drug use. It goes without saying that the next higher degree of involvement: sneaking drugs into an employee’s drink or diet is both illegal (a form of assault) and an unethical breach of individual privacy and freedom rights.
Complicit organizations know employees are using drugs and don’t intervene—they may suspend drug testing or refuse to initiate it—because the use suits the organization’s interest. This could be the football coach who just doesn’t want to know how his lineman suddenly exploded with muscle over the summer. Or the complicity could be for the young lawyer in the firm who works to all hours and always seems peppy and alert. One day someone may notice a pill case dropping out of her purse, but no one’s going to ask any questions as long as she keeps cranking out those billable hours.
Should questions be asked? One answer is simply “No.” The football player and lawyer are free individuals pursuing their own welfare as they see fit and as they’re free to do. They’re not hurting anyone else along the way and should be left alone. This argument, based on the values of individual rights and freedom, is very strong.
Things become more complicated, however, in a case like Amy Winehouse’s, one where she’s clearly being damaged by her abuse. The root question is straightforward: when should I go out of my way—or perhaps even harm my own interests—to help out someone else? If I’m Winehouse’s manager, and I’m making money off her publicity-grabbing drug episodes, at what point do I need to say the money isn’t worth it, and my human responsibility for the well-being of those around me requires that I try to do something (like send her to rehab)? This scenario involves Samaritanism, which itself makes up an entire area of ethical study.
Samaritanism—taken from the biblical parable of the Good Samaritan—is the ethical responsibility to step in and help others. Most duty theorists contend that we have an unavoidable responsibility to help others in need as long as the cost to ourselves is not disproportionately burdensome and as long as there’s some possibility of actually aiding. Taking a simple example, a person who can’t swim has no responsibility to jump in after a drowning man, but Michael Phelps would have an obligation to get in the water unless the flow was so violent and fast that even he would be powerless to help. As for the manager faced with a self-destructing client, it’s hard to see—from this ethical perspective—what could erase his obligation to help Winehouse clean up since the only thing he has to lose is money.
The Ethics of Drugging Employees: Enabling Organizations
Enabling organizations actively encourage or at least facilitate drug use by employees because it serves their interest. Of course almost all organizations engage in this facilitating to some small extent. The New Year’s office party where drinks are free and free-flowing is, at bottom, a drug event where alcohol hopefully washes away some of the resentments and angers accumulated over the preceeding twelve months.
More aggressively, many occupations (especially those directly involving selling) require employees to be cool—and look cool—under pressure. This can be difficult. A story from the Atlantic magazine discusses beta-blockers, which are essentially blood-pressure medications that coincidentally reduce the outward appearance of nervousness: they help you avoid the sweat beading on the forehead, trembling hands, and dry mouth. Carl Elliott, “In Defense of the Beta Blocker,” Atlantic, August 2008, accessed June 1, 2011, http://www.theatlantic.com/magazine/archive/2008/08/in-defense-of- the-beta-blocker/6961/. As the story notes, beta-blockers aren’t nearly as potent or dangerous as the doping of North Korean Olympic athletes, but they’re not a harmless over-the-counter medication either.
Beta-blockers carry real risks. Even granting the risk, though, it’s not hard to imagine that more than one supervisor has found a way to get the Atlantic magazine story into the e-mail of an employee who’s had a history of tightening up at key moments. In fact, the business consultant Keith Ferrazzi once made the recommendation on his web page, but then withdrew it after receiving complaints: “I originally included a reader’s recommendation of the beta blocker Propranolol in this list of public speaking tips, but have removed it after taking to heart the concern of many KF.com readers.” Keith Ferrazzi, “10 Tips to Banish Your Public Speaking Fear for Good,” Keith Ferrazzi: Business is Human. Relationships Power Growth (blog), August 26, 2009, accessed June 1, 2011, www.keithferrazzi.com/personal-branding/10-tips-to-banish- your-public-speaking-fear-for-good/.
Somewhat more ominously, there’s the infamous case of the Studio 54 busboys at the height of the club’s popularity. Blonde (frequently) and naked (usually) except for tight spandex shorts, they were plied with drugs to increase their energy level and commitment to customer service in all imaginary ways. The busboys, it must be noted, were more than willing participants, but the fact that everyone agreed doesn’t necessarily make the scene ethical. One useful tool for evaluating this exuberant but also troubling situation is the already developed notion of informed consent. In order for the case to be made that drugging willing employees is acceptable, it will help to fulfill the following requirements:
• Employees must fully understand what they’re being given, as well as the risks and benefits.
• Employees must fully understand why the drugs are being provided.
• Employees must be given a clear indication of what acceptance or rejection means for their career.
• Employees must be allowed a deliberative decision—the option should be offered for consideration, not thrown at them for a sudden yes-no answer.
The fact that an employee makes an informed decision to use performance-enhancing drugs at work doesn’t rinse an enabling employer of all ethical responsibility. Business is just like any other aspect of life in the sense that employers, like everyone else, have a duty of Samaritanism or beneficence—that is, a responsibility to look out for the long-term welfare of others so long as their own welfare isn’t significantly affected. Further, the responsibility to respect the humanity of others and not use them as a simple tool in our schemes (to see them as ends and not means) translates as a demand that organizations advocating internal drug use clarify what their own motives are. Finally, if the drugs are illegal, the possibility that people will end up in jail needs to be factored into consideration.
Going beyond the ethical discussion involving only employer and employee, there are a number of broader and difficult questions that could be pressed, especially by proponents of utilitarian theory. If right and wrong is ultimately defined by the general public welfare, it may be difficult to justify drugs in the workplace even if employer and employee wholeheartedly agree to use them. What happens, for example, at other workplaces? In the highly competitive field of professional sports, it’s clear that when one team starts using some substance, others will have to join in or get beaten on the playing field. In other occupations the need to imitate to succeed may not be so immediate, but there still may be an undertow. If Amy Winehouse is eating up all the free publicity in the music business with her drug-fueled exploits, aren’t other musicians going to feel pressured to follow along? If a sales team at Smith’s Tires is using beta-blockers and winning deals, aren’t the sellers at Jones’ Tires going to start feeling the need to swallow some pills? If the effects, finally, of drug use in the workplace go beyond that particular spot, then the effects on those outsiders need to be accounted for in order for a final decision to be well justified.
Key Takeaways
• In some cases employee drug use may serve the organization’s interests.
• Organizations may be complicit with or enabling of employee drug use.
Exercise \(1\)
1. Can you provide your own example from the business world of an organization that is complicit with respect to employee drug use?
2. Can you provide your own example from the business world of an organization that is enabling with respect to employee drug use?
3. Why might Samaritanism diminish workplace pressure on employees to use drugs?
4. What are the requirements for informed consent when it comes to employees accepting the organization’s invitation to use drugs? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/11%3A_The_Aroused_Office_-_Sex_and_Drugs_at_Work/11.04%3A_The_Organization_Wants_You_to_Use_Drugs.txt |
Holly Madison for PETA
Source: Photo courtesy of Alisha Vargas, www.flickr.com/photos/alishav/3461411273/.
PETA (People for the Ethical Treatment of Animals) is an animal rights organization. According to their website, “PETA focuses its attention on the four areas in which the largest numbers of animals suffer the most intensely for the longest periods of time: on factory farms, in the clothing trade, in laboratories, and in the entertainment industry.” “Our Mission Statement,” PETA (People for the Ethical Treatment of Animals), About, accessed June 1, 2011, http://www.peta.org/about/index.asp.
Both an organization and a cause, PETA depends on public attention and donations. Attention is necessary because raising consciousness about animal suffering is more or less a prerequisite to fighting against it. Nearly all companies causing animal suffering as part of their daily business struggle mightily to hide it from their consumers: what’s not seen, the reasoning goes, isn’t a problem. PETA wants cruel animal treatment to be seen.
Donations are also necessary because PETA is a nonprofit. Many people give cash, but some give their time and themselves. Celebrities can be especially helpful given their ability to generate interest and grab attention in a noisy world. One celebrity participant is the Hollywood actress Alicia Silverstone. In August of 2010, she was featured in a video on PETA’s home page. Here’s the accompanying text: “Sexy Hollywood star Alicia Silverstone bares all in PETA’s first ever naked veggie testimonial, shot by acclaimed director Dave Meyers.”PETA (People for the Ethical Treatment of Animals) home page, accessed June 1, 2011, http://www.peta.org. Screenshot of PETA homepage featuring Alicia Silverstone from Business Ethics Workshop, businessethicsworkshop.com/Chapter_11/peta.html.
Much of the video is shot in slow motion. Silverstone pulls herself out of a swimming pool, leans into the camera, holds it with her smoky eyes, and talks about the advantages of being a vegetarian. No clothes are visible. “I am an Actor and I am a Vegetarian: Now Featuring Alicia Silverstone,” PETA (People for the Ethical Treatment of Animals), Vegetarian Testimonials, accessed June 1, 2011, veggietestimonial.peta.org/psa.aspx?CID=8ce2420c-021c-49bc-91c5-b02a8775e2a2.
Exercise \(1\)
1. Alicia Silverstone praises the virtues of vegetarianism nude. Do you believe this is an example of product sincerity—that is, of openness and honesty about what’s being sold?
• What is the product here?
• What elements of its presentation might seem insincere?
• What elements of its presentation might seem sincere?
• On balance, why do you believe the short video is sincere or insincere?
2. Almost certainly some people watched this video because they wanted to see a nude woman.
• What is a prurient interest?
• Make the case that this video promotes a prurient interest.
• Assuming the video promotes a prurient interest, who should feel ethically ashamed of their action: Silverstone, PETA, the viewers, some combination, someone else?
3. Silverstone could have filmed her monologue with her clothes on. Make the case that she should have because her decision to strip down to get attention results in her objectification.
• In terms of the ethics of objectification, is there any difference between letting people see you in a video and on a nude beach? Why or why not?
• PETA is a respected nonprofit organization (which isn’t to say everyone agrees with their methods and cause, only that most respect their dedication and altruism). Does that give them a license to objectify Silverstone? Why or why not?
• Should this book’s web page include a link to watch the video? Justify your answer in ethical terms.
Milan?
Source: Photo courtesy of Oteo, www.flickr.com/photos/52871206@N00/1286382332.
The question posted by Chourok C on the Yahoo! Answers web page begins this way:
I just started this job 2 weeks ago as the CEO’s personal assistant. He is married 3x and is a very charismatic man, the CEO of a self built multi-million empire.
After a few days, he suddenly asked me if he could take me out to diner in London, if I book my flights and hotel he will afterwards reimburse me. Chourok C, “My boss wants to sleep with me?,” Yahoo! Answers, accessed June 1, 2011, answers.yahoo.com/question/index?qid=20090419030102AAbYEDf.
It was then, she relates, that she knew he wanted to sleep with her. In her words, she’s “totally not interested, but wants to preserve the job by not rejecting him.” So she made an excuse to get out of it and her post continues: “He then bothered me for hours about giving him good reasons why I couldnt go. Then he said OK, next week we will go to Milan! He is a very powerful man, and I just get nervous of him. But I really do not want to lose my job. What should I do?” Chourok C, “My boss wants to sleep with me?,” Yahoo! Answers, accessed June 1, 2011, answers.yahoo.com/question/index?qid=20090419030102AAbYEDf.
Exercise \(2\)
1. What should she do? Justify in ethical terms.
2. Here’s an answer posted by aznelepahnt5: “If he’s good-looking, and there’s a guarantee that you’ll get better pay/promoted, then yes, you should do it.” aznelephant5, comment on Chourok C, “My boss wants to sleep with me?,” Yahoo! Answers, accessed June 1, 2011, answers.yahoo.com/question/index?qid=20090419030102AAbYEDf.
Make the case that she’s ethically free to follow the advice, to say yes to advance her career.
3. Make the case that Chourok C is not ethically free to go to Milan with him in order to advance her career, regardless of whether she’s attracted to him or not.
4. The poster called Srta. Argentina answers, “He can’t fire you because you rejected his sexual advances. You can sue him if he does. And you can file a sexual harassment claim against him.” Srta. Argentina, comment on Chourok C, “My boss wants to sleep with me?,” Yahoo! Answers, accessed June 1, 2011, answers.yahoo.com/question/index?qid=20090419030102AAbYEDf.
• What is sexual harassment?
• Sketch the harassment case against the CEO.
• At what point in the chronology does the CEO’s behavior cross from the ethically acceptable to the unacceptable? Why?
• If the CEO hired you to form an ethical defense of his behavior, what would the case look like?
5. The poster called Skater Boi proposes an aggressive solution: “Get a voice recorder and record what he says. blackmail if he tries to fire you.” Skater Boi, comment on Chourok C, “My boss wants to sleep with me?,” Yahoo! Answers, accessed June 1, 2011, answers.yahoo.com/question/index?qid=20090419030102AAbYEDf.
It sounds like the blackmail Skater Boi is proposing would entail threatening a sex harassment lawsuit unless the boss gives her favorable treatment.
Ethically, is there any difference between the boss threatening to fire her unless he gets what he wants and her threatening to turn him in unless she gets what she wants? If so, what is it? If not, why not?
International Affair
Source: Photo courtesy of Nadia J., www.flickr.com/photos/n_/2341401406/.
A newspaper account gives an idea of how different the world can be on the other side of national and cultural borders. The report tells of an unnamed executive, a twenty-two-year-old woman from St. Petersburg who found herself locked out of her office after resisting her boss’s lewd advances. She took her case to court, “hoping to become only the third woman in Russia’s history to bring a successful sexual harassment action against a male employer.” Adrian Blomfield, “Sexual Harassment Okay as It Ensures Humans Breed, Russian Judge Rules,” Telegraph, July 29, 2008, accessed June 1, 2011, http://www.telegraph.co.uk/news/worldnews/europe/russia/2470310/Sexual-harrassment-okay-as-it-ensures-humans-breed-Russian-judge-rules.html.
She didn’t make it.
According to the judge who ruled against her, everything had just been part of normal courtship and romance. He went so far as to affirm, “If we had no sexual harassment we’d have no children.”
Sexual harassment—as the concept is defined and understood in America—is a customary part of life in the Russian workplace. In Russia, 40 percent of female professionals have had sex with their boss at least once, according to the story. Yes, that’s 40 percent. Rounding out the picture, “Eighty per cent of those who participated in the survey said they did not believe it possible to win promotion without engaging in sexual relations with their male superiors. Women also report that it is common to be browbeaten into sex during job interviews.” Adrian Blomfield, “Sexual Harassment Okay as It Ensures Humans Breed, Russian Judge Rules,” Telegraph, July 29, 2008, accessed June 1, 2011, http://www.telegraph.co.uk/news/worldnews/europe/russia/2470310/Sexual-harrassment-okay-as-it-ensures-humans-breed-Russian-judge-rules.html.
Exercise \(3\)
1. What is a culturalist ethics?
2. American multinationals are sometimes accused of being ugly and imperialist because they force members of other cultures to accept a system of values and rules that conflict with local practices, beliefs, and customs.
• How could that accusation be described when an American company installs itself and its American policies for employee behavior in Russia? What basic values support the accusation?
• An American laboring in a multinational corporation is assigned to open and manage an office in Russia, one that will be staffed by locals. How could a cultural ethics be transformed into an obligation that all those in the office more or less adapt to the customary expectations of sex in the workplace brought from the States?
3. Back in America, direct and explicit demands of sex for work are uncommon. Sex at work, however, or at least sexiness and attractiveness, does seem to connect with job offers according to what economists Markus Mobius and Tanya Rosenblat found when they got together and performed a series of experiments discussed in their paper “Why Beauty Matters.” Their conclusions about the power of attractiveness in the typical US workplace can be partially summarized by recounting one test.
Employers were divided into two groups and asked to hire a few job applicants. Some employers got a stack of CVs. Others got the CVs with a photo attached. The two groups then sorted out the applicants that they would like to hire. Comparing the results revealed a beauty premium. The fact that someone—whether it was a man or a woman—was physically attractive converted in the mind of employers into a job qualifier. That is, those men and women who were good looking were also judged as the most likely good workers, the kind you want to hire because they’re capable and will do a good job. Markus Mobius and Tanya Rosenblat, “Why Beauty Matters,” June 24, 2005, accessed June 1, 2011, http://citeseerx.ist.psu.edu/viewdoc/download?doi= 10.1.1.118.3553&rep=rep1&type=pdf.
Is there a single ethical argument that could be set against the Russian custom of demanding sex to get a job, and the American custom of (to some extent) demanding sexiness to get a job?
Drugs and Drug Testing at Coke
Source: Photo courtesy of Allen Li, http://www.flickr.com/photos/mag-cafe/529986283/.
John Pemberton came up with the original Coca-Cola recipe in 1886 and sold it out of Jacob’s Pharmacy in Atlanta, Georgia. Advertised as a medicine, the drink was supposed to cure headaches and impotence.
Coke certainly delivered a rush. Brewed to contain a massive dose of cocaine, the drink was virtually guaranteed to succeed. Not surprisingly, many over-the-counter medicines started boosting their appeal by including the coca leaf extract. By the end of the century, however, public attitudes began turning. Rather than a cure, cocaine came to be seen as a ruinous addiction. Coke responded by radically cutting the cocaine in the drink, and by 1903 there was none, though the product still contained (and to this day contains) flavoring from the same coca leaf that earlier provided the drug. Finally, in 1914, the Harrison Act effectively outlawed the sale and distribution of cocaine both on its own and as an ingredient.
The other side of the original Coca-Cola jolt came from the kola nut, which added a slightly bitter taste to the drink, and lots of caffeine. (“Coca” corresponds with the coca leaf and cocaine, “Cola” with the kola nut and caffeine.) That additive also fell out of the public’s favor, though not to the extent or depth of cocaine. In 1911, the US government sued to get the substance removed on the grounds of its pernicious effects, but failed (United States v. Forty Barrels and Twenty Kegs of Coca-Cola). The next year the Food and Drug Act defined caffeine as “habit forming” and “deleterious,” and required that the substance be listed on Coke’s label.
Exercise \(4\)
1. An accounting office manager stumbles on a warehouse full of the original, cocaine Coca-Cola.
• Make the case that he has a responsibility to provide the bottles to his workers and encourage them to drink the liquid down. What benefits could the manager hope to receive? Why does the manager hold a professional responsibility to achieve those benefits?
• Make the case that the manager has a responsibility to provide bottles of both the original (now illegal) formula and today’s formula to staff members, and allow them to choose to drink either one, both, or neither.
• Make the case that he has a responsibility to provide bottles of only today’s formula to staff members, and allow them to drink it or not.
• Make the case that, ethically, he should tolerate no Coca-Cola of any kind in the workplace.
2. In a web posting, mmafan, from Dayton, Ohio, writes about his experience working for the Coca-Cola company: “We even had someone witness a merchandiser, on the clock, in uniform, and in a company vehicle, smoking a joint in a store parking lot. Not only did the union prevent Coke from terminating or disciplining him, they protected him from submitting to a drug test. So Coke had to just let it go. All the union did was protect the lazy, the incompetent, and the screw-ups if you ask me.”mmafan, comment on Isgchas, “It sounds like working for Coke is bad all over the country. Does anybody work for a union shop? Is that any better?,” Indeed, accessed June 1, 2011, http://www.indeed.com/forum/cmp/Coca--Cola/get-job-at-Coca-Cola/t10481/p2.
In response, the union could mount a number of arguments to defend their decision to not let Coke administer a drug test. The most frequently cited ethical reasons to refuse drug tests are the following:
• To protect the right to privacy
• To protect the right to freedom
• Because of slippery slope concerns
• Because of imperfect testing
Which of these kinds of arguments would best support the union’s decision to protect the employee from a drug test? What would the argument look like?
3. Mmafan believes the union did nothing more than “protect the lazy, the incompetent, and the screw-ups.” This complaint is actually the root of a powerful and thoughtful ethical argument in favor of drug testing because drug-free workplaces maximize employee performance. Fill out the argument:
• Whose obligations are served by drug tests?
• What are those obligations?
• Name an ethical theory that forcefully supports the use of drug testing in the workplace. What’s the reasoning?
4. The Coca-Cola company’s history is laced with cocaine.
• Given the fact that cocaine was a key ingredient in getting the Coca-Cola Company off the ground, does that organization have any right to preclude the use of drugs in the workplace or anywhere else? Why or why not?
• When Coke included coke, the substance was legal, and a respected medicine. Should that fact affect your answer to the previous question? Why or why not?
Acid Rock
Source: Photo courtesy of Paige Powers, http://www.flickr.com/photos/paigggeyy/5533236567/.
Ultimate-Guitar.com is a guitar and rock site. One of its articles begins this way: “Of the many articles in Ultimate Guitar which deal with the history of musicians in this day of modern music, there is one participant who seems missing. The history of this participant is responsible for influencing a huge range of artists, possibly second to none.” Kalakala, “LSD and 60’s Music: What We Owe to It. Part 1,” Ultimate-Guitar.com, August 12, 2006, accessed June 1, 2011, www.ultimate-guitar.com/columns/junkyard/lsd_and_60s_music_what_we_owe_to_it_part_1.html.
The participant is LSD. Without that, the column affirms, there’d be no Grateful Dead, Carlos Santana, Jimi Hendrix, Doors, Beatles, or Pink Floyd. At least not as we now know them. The article covers a lot of ground, but the basic point is that taking the illegal drug LSD helped these guys become great musicians. In the comments section, many people responded.
Exercise \(5\)
1. ATL_420 writes, “I don’t know about y’all, but I have recorded music while tripping on acid. I was the most talented I have ever been on guitar during those hours.”
Assume you are the manager of ATL_420’s band. Convince yourself that you have an ethical duty to make sure he’s got all the LSD he needs when he’s in the recording studio. Make the case, in other words, that you should be an enabler.
2. Strat_Monkey says, “I’m going to go with what I’ve heard from several drug-using musicians which is basically: Yes, Drugs CAN open your mind and allow you to make better music, BUT if you take too many you will f*ck yourself up good and proper. Moderation is the key here.”
How would someone who subscribes to a utilitarian ethics (the greatest good for the greatest number should be sought) define the term moderation? What kinds of fears would this ethicist have about allowing Strat_Monkey to use LSD?
3. Ramco addresses this to the article’s author:
If this article causes even one person to try LSD then you are a monster.
LSD is a fungus that degenerates the brain stem, and continues to remain in the brain for years, causing “acid flashbacks” at unexpected and inopportune times. With the exception of heroin, LSD has the worst long-term effects of any drug.
Also, LSD has given us some of the WORST music ever. There are plenty of drug-inspired songs that only appeal to those on drugs.
I am disappointed in UG for approving this article which is nothing but an advertisement for LSD, which is not only dangerous but also illegal.
Use two distinct ethical theories to develop two independent arguments that the article’s author is a monster.
4. Assume that both sides of this argument have some hold on the truth. In some cases LSD really did help musicians produce excellent music, but the effects of LSD use are also extremely harmful. How do you decide where to draw the line? How much social harm are you willing to tolerate for some good music? Justify.
5. One way for music company executives to manage the fact that some of their acts use a lot of drugs is with complicity—that is, adopting a kind of “don’t ask, don’t tell” policy. Even though drug use wouldn’t be encouraged, it wouldn’t be tested for either. What are some of the ethical advantages to this approach? What are some of the disadvantages?
6. In the comments section of the Ultimate-Guitar.com article, kosarsosar adds this about a hallucinogenic drug: “It didnt do much for me, however it did make my girlfriend run around the house flapping her arms like a bird.”
Ethically, is there anything wrong with taking a drug that does that to you? If so, what? If not, why not? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/11%3A_The_Aroused_Office_-_Sex_and_Drugs_at_Work/11.05%3A_Case_Studies.txt |
Chapter 12 considers the ethics of selling by examining advertising, and the ethics of buying by examining conceptions of the consumer.
12: The Selling Office- Advertising and Consumer Protection
Learning Objectives
1. Define and characterize informational advertising.
2. Define and characterize branding advertising.
Old Spice
One reason guys like to have the controller when couples are watching TV is so they can flip the channel fast when ads like this come on:
Viewed from the waist up, you see a perfectly bodied man wrapped in a low-slung towel. With gleaming eyes locked on the camera he intones, “Hello, ladies, look at your man, now back to me, now back at your man, now back to me.” While guys at home cringe, he comes to an indisputable conclusion, “Sadly, he isn’t me.” After letting the reality sink in, he soothes his female viewers with the information that “He could at least smell like me if he switched to Old Spice body wash.” Next, he asks us to “Look down,” and while everyone’s eyes drop to his towel, some green screen magic allows him to seamlessly appear on a romantic sailboat in the Caribbean. His hand overflows with diamonds, then a bottle of Old Spice arises along with them, and we learn that, “Anything is possible when your man smells like Old Spice.”
Video Clip
Old Spice: The Man Your Man Could Smell Like
(click to see video)
Advertising is about enticing consumers. It comes in many forms, but the two central strategies are (1) informational and (2) branding.
Ads: Information and Branding
There are more and less sophisticated ways of enticing consumers. At the lowest level, there are product-touting ads and comparisons giving straight information. When Old Spice set aside some money to sell their body wash, they could have gone that route, they could’ve dabbed some product on a shirt and asked random women to stop, take a sniff, and report on the scent. Then magazine spreads could be produced announcing that “three out of four women like the Old Spice scent!” A bit more aggressively, women could be given a blind sniff test featuring Old Spice and Axe products, or Old Spice and some “leading brand,” one probably chosen because it fares particularly poorly in the comparison test. In any of its forms, this is informational advertising. It presents facts and hopes that reasonable consumers buying body wash will choose Old Spice.
Other kinds of informational advertising include price comparisons (Old Spice costs less than Axe) and quality comparisons (the Old Spice scent lingers eight hours after showering, and Axe is gone after only six). Naturally, different kinds of products will lend themselves to different kinds of factual and informational claims. Sometimes, finally, this kind of advertising is called transactional because it’s directly about the exchange of money for a good or service.
Moving toward more sophisticated—or at least less rational and direct—advertising, there’s branding, which is the attempt to convert a product into a brand. In the advertising and marketing world, the word brand has a very specific meaning. It’s not the name of the company making the product, not the words Old Spice or Kleenex. Instead, a brand is a product or company’s reputation; it’s what you think of when you hear the name and it’s the feelings (good or bad) accompanying the name. Technically, a brand is what a product or company is left with when you take everything away. Exemplifying this in the case of Old Spice, imagine that tomorrow all their production factories burn down, their warehouses flood, and their merchandise sells out at every store. Basically, the company has nothing left, no factories to make product, no stock to ship out, and no items left to sell on any shelf. Now, if you were a wealthy investor, would you buy this company that has nothing? You might.
You might because it still has its brand, it still has a reputation in people’s minds, and that can be worth quite a bit. Frequently, when we visit a store and stand in front of shelves packed with different versions of a single kind of item, we don’t have time or the patience to carefully go through and compare price per ounce or to Tweet questions to friends about what they recommend. We choose one body wash—or one style of underwear or Eveready batteries instead of Duracell—because of an idea about that product planted in our mind. Maybe we don’t know exactly where the idea came from, or exactly what it is, but it’s there and guides us to one choice instead of another. It makes a product seem like it’s our kind of product (if it’s the one we end up buying) or not our kind of product.
The Old Spice commercial is an exercise in branding. It’s funny, sexy, embarrassing, and extremely sophisticated. Looking at the commercial, the first question to ask is “in the most literal terms, what’s the message?” Is it that Old Spice is a good value? No, there’s no talk about price. Is it that Old Spice smells good? No, the only claim is that it can make you smell like an attractive actor. Is it that the actor (and former pro football player) Isaiah Mustafa uses Old Spice? No, he says he does, but that’s not the message. If anything, his message to potential consumers is that, if he wanted to, he could steal their girlfriends. This is not the kind of information that wins market share.
Fortunately for Old Spice, branding isn’t about facts or truths; it’s about producing an attitude and connecting with a specific sense of humor and outlook on life. Like a style of clothes or a preference for a certain kind of music, Old Spice is conveying a personality that you appreciate and like or, just as easily, dislike. That’s why the whole commercial comes off as a kind of joke about a certain vision of attraction and romance and sex. Do you enjoy the joke? If you don’t, then Old Spice is going to have to find a different way to get into your (or your boyfriend’s) wallet. If you do like it, if the whole thing seems zany and funny and you wouldn’t mind pulling it up on YouTube to watch again, then you’ve been branded. Old Spice has found a way to get past all the defenses we usually set up when we see advertising, all the skepticism and cynicism, and gotten us to feel like we’re part of something that includes that company’s products.
In broad strokes, finally, there are two kinds of advertising, two strategies for influencing consumption choices. One works by appealing to facts and provides information; the other appeals to emotions and creates a lifestyle. Both kinds of advertising raise ethical questions.
1. Informational ads provoke questions about truth and lies.
2. Branding efforts provoke questions about the relation between our products and who we are as individuals and a culture.
Key Takeaways
• Informational advertising employs facts to persuade consumers.
• Branding advertising attempts to attach a personality and reputation to a product.
Exercise \(1\)
1. Can you think of an example of an informational ad? What information is provided, and how does it persuade consumers?
2. Can you think of an example of a branding ad? What personality and attitude are attached to the product? How might those characteristics persuade consumers? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/12%3A_The_Selling_Office-_Advertising_and_Consumer_Protection/12.01%3A_Two_Kinds_of_Advertising.txt |
Learning Objectives
1. Delineate different types and degrees of deceitful advertising.
2. Discuss legal and regulatory responses to deceitful advertising.
3. Map the ethical issues surrounding deceptive ads.
Types of Deceitful Advertising
An initial way to distinguish informational advertising from branding is by asking whether consumers are supposed to ask whether the claims are true. In the case of the Old Spice body wash TV spot, there’s no question. The actor asserts that “anything is possible with Old Spice” as diamonds flow magically from his hands. But no one would buy the product expecting to receive diamonds. They wouldn’t because branding ads are neither true nor false. Like movies, you enjoy them (or you don’t) without worrying about whether it could really happen. Informational ads, on the other hand, derive their power from selling consumers hard facts. When the ad claims the product costs less than similar offerings from rivals, the first question is “really?” When the answer is “no,” the advertising is deceitful.
There are four ways that informational advertising can be deceitful:
1. False claims directly misrepresent the facts. For example, an Old Spice body wash ad could announce that it costs less per ounce than Axe. When you go to the store, however, the opposite is true. It may be that the manufacturer’s suggested retail price is less, or Axe is on a special sale, but if the ad says Old Spice is cheaper and it’s not, that’s a false claim.
2. Claims that conceal facts are more common than directly false ones because they’re not flatly untrue and so can’t be easily disproven. A body wash, for example, may conveniently leave out the fact that chemical scents frequently react differently with different skin types and body temperatures, meaning a product may smell great on one man but come off as nauseating when used by most others. Another set of examples surround the infamous fine print on contracts. Every day, someone somewhere receives an offer for a free issue of a magazine and sends the business reply card in. It’s not until a few months later, however, that they realize that getting the free one also committed them to buying a year’s worth. Another example of a concealed fact is a juice made from “natural ingredients,” and it turns out the natural ingredient is sugar, which is natural, but not the fruit juice from real oranges you were expecting.
3. Ambiguous claims resemble concealed facts in not being directly untrue. Where claims that conceal facts manipulate consumers by leaving something out, ambiguous claims mislead by putting too much in. For example, a body wash may announce that it “kills the smelly bacteria that women hate most,” and that may be true, but the implication that only Old Spice does that is misleading because all soaps and washes wipe out some bacteria. Just water washes a good bit away. Similarly, Viagra announces that before using the product, men should check with their doctor to “ensure that you are healthy enough to engage in sexual activity.” The misleading idea is that the rock and rolling will be so intense it could be life threatening. The truth is that the drug itself may be dangerous for the unhealthy. Finally, cigarette companies use a similar strategy when they advertise light cigarettes as (truly) containing less cancer-causing tar, but they leave out the fact that the lower nicotine levels cause many smokers to light up more often and so take in as much, or even more, than they otherwise would have. In every case, the ad’s claim is technically true, but it leads consumers toward possibly false assumptions that just happen to make the product more attractive.
4. Puffery is a technical term in the advertising world. It signifies expressed views that are clearly subjective exaggerations or product slogans, and not meant to be taken literally. In the Old Spice ad, the actor’s claim that “anything is possible with Old Spice” is actually an ironic joke about puffery: the ad is poking fun at those other personal care products that in essence claim the women (or men) will come running. Here are two standard examples of puffery: Budweiser is “The King of Beers” and Coke is “The Real Thing.” More generally, any product labeled “The Finest,” and all services that announce they “Can’t be beat!” are engaging in the practice. Of course these kinds of slogans can be harmless with respect to their violation of strict truth telling, but they do place a burden on consumers to be wary.
Deceitful advertising, finally, is not the same as false advertising. All false ads are also deceitful, but there are many ways of being deceitful that don’t require directly false claims.
Legal Responses to Deceptive Advertising
Created in the early 1900s, the Federal Trade Commission (FTC) was originally tasked with enforcing antitrust laws. With time, its responsibilities have expanded to include consumer protection in the area of marketing and advertising. Today, many legal conflicts over truth and sales run through its offices.
The act authorizing the FTC to begin regulating advertising declares that “unfair and deceptive practices” are illegal, and the agency is charged with the responsibility to investigate and prevent them.Section 5, Federal Trade Commission Act. In judging what counts as deceptive, two models are frequently used. The reasonable consumer standard is the looser of the two. It presumes that protections should only be extended to cover advertising that would significantly mislead a thoughtful, moderately experienced consumer. One advantage of this stance is that it allows the FTC to focus on the truly egregious cases of misleading advertising, and also on those products that most seriously affect individual welfare. Very close attention is paid to advertising about things we eat and drink, while fewer resources are dedicated to chasing down garden-variety rip-offs that most consumers see through and avoid.
One borderline case is the FTC v. Cyberspace.com. In that case, and according to their press release, the FTC charged that the defendants
engaged in an illegal scheme to deceive consumers by mailing \$3.50 “rebate” checks to millions of small businesses and consumers. The check came with an attached form that looked like an invoice and used terms like “reference number,” and “discount taken,” making it look like there was a previous business relationship. By cashing the checks, the FTC alleged that many small businesses and consumers unknowingly agreed to allow the defendants to become their Internet Service Provider. After the checks were cashed, the defendants started placing monthly charges of \$19.95 to \$29.95 on the consumers’ telephone bills. According to the FTC, the defendants then made it very difficult to cancel future monthly charges and receive refunds. “Bogus ‘Rebate’ Offers Violate Federal Law,” Federal Trade Commission, August 5, 2002, accessed June 2, 2011, www.ftc.gov/opa/2002/08/cyberspace.shtm.
The judge sided with the FTC.
Whether or not these businesspeople should have seen through the free-money scam and thrown the “check” in the trash, it’s certain that the FTC should have stepped in under the ignorant consumer standard. Within this framework—which is much stricter than the reasonable consumer version—consumers are protected even from those scams and offers that most people recognize as misleading. One point to make is that the “ignorant consumer” isn’t synonymous with dumb. Though the category does catch some people who probably should’ve tried a bit harder in school, other ignorant consumers may include immigrants who have little experience with American advertising practices and customs. The elderly too may fall into this category, as might people in situations of extreme or desperate need. One example would be late-night TV commercials appealing to people in deep debt. Some ads promise that loan consolidation will lower their overall debt. Others imply that filing for bankruptcy will virtually magically allow a start-over from scratch. Both claims are false, but when creditors are calling and threatening to take your home and your car, even the most reasonable people may find themselves vulnerable to believing things they shouldn’t because they want to believe so desperately.
The federal government, finally, through the FTC has the power to step in and protect these consumers. Strictly from a practical point of view, however, their resources are limited. The task of chasing down every ad that might confuse or take advantage of someone is infinite. That factor, along with good faith disagreements about the extent to which companies should be able to shine a positive light on their goods and services, means (1) the ignorant consumer standard will be applied only sparingly by government regulators, and (2) borderline cases of advertising deceit will be with us for the foreseeable future.
The Ethics of Deceitful Advertising
One way to enter the ethical debate about dubious product claims is by framing the subject as a conflict of rights. On one side, producers have a right to talk sunnily about what they’re selling: they’re free to accentuate the positives and persuade consumers to reach for their credit card. On the other side, consumers have a right to know what it is that they’re buying. In some fields, these rights can coexist to some significant extent. For example, with respect to food and drink, labeling standards imposed on producers can allow consumers to literally see what’s in their prospective purchase. Given the transparency requirement, companies can make a strong argument that they should be allowed to advocate their products with only minimal control because consumers are free to check exactly what it is they’re buying.
Even these clear cases can become blurry, however, since some companies try to stretch labeling requirements to the breaking point to suit their purposes. One example comes from breakfast cereal boxes. On the side, producers are required to list their product’s ingredients from high to low. At the top you expect to see ingredients including flour or similar, as quite a bit of it goes into most dry cereals. At the bottom, there may be some minor items added to provide a bit of flare to the taste.
One specific ingredient many parents worry about is sugar: they don’t want to send their little ones off to school on a massive sugar high. So what do manufacturers do? They comply with the letter of the regulation, but break the spirit by counting sugar under diverse names and so break up its real weight in the product. Here are the first few lines of the ingredients list from Trix cereal:
Corn (Whole Grain Corn, Flour, Meal), Sugar, Corn Syrup, Modified Corn Starch, Canola and/or Rice Bran Oil, Corn Starch, Salt, Gum Arabic, Calcium Carbonate, High Fructose Corn Syrup, Trisodium Phosphate, Red 40, Yellow 6, Blue 1.
Sugar is sugar, corn syrup has a lot of sugar, high fructose corn syrup has even more sugar. We’d have to get a chemist to tote up the final results, but it’s clear that a reasonable consumer should figure this is a sugar bomb. Is it fair, though, to assume that an immigrant mother—or any mother not well versed in sugar’s various forms—is going to stop and do (or be able to do) a comprehensive ingredient investigation? The question goes double after remembering that the first image consumers see is the product’s advertising on the box featuring a child-friendly bunny.
More generally, in terms of a pure rights-based argument, it’s difficult to know where the line should get drawn between the right of manufacturers to sell, and the right of consumers to know what they’re buying. The arguments for pushing the line toward the consumer and thereby allowing manufacturers wide latitude to make their claims include the following:
1. Free speech. The right for people to say whatever they want doesn’t get suspended because someone is trying to sell a product. Further, on their side, consumers are completely free to buy whatever they want, they’re free to listen to pitches from competing merchants, and they can consult the Consumer Reports web page and talk to friends. Ours is, after all, a free market, and advertisers participate in it. The right to make whatever advertising claims one wishes is justified on principle, on the ideal of a liberal (in the sense of free) economic world.
2. Marketers have a moral responsibility to do everything they possibly can to sell because they’re obligated to serve their employers’ interest, which is to make money, presumably. In this case, deceitful advertising may be morally objectionable but less so than failing to turn the highest profit possible.
3. Within the context of an open market economy, one way to help it function efficiently, one way to get products and services sent where they’re supposed to go in a way that benefits everyone, is by maximizing the amount of information consumers have before they purchase. And one way to maximize information, it could be argued, is by letting competing sellers advertise freely against each other. They can say whatever they like about themselves and point out exaggerations and untruths in the claims of competitors. This is similar to what happens in courtrooms where plaintiffs are allowed to say more or less whatever they want and defendants can do that too. Both sides cross-examine each other, and in the end, the jury weighs through it all and decides guilt or innocence. Returning to the economic realm, the argument is that the best way to get the most information possible out to consumers is by allowing a vibrant advertising world to flourish without restriction.
On the other side, distinct arguments are frequently proposed to defend the position that sellers should operate within tight restrictions when advertising the virtues of their goods and services. The consumer should be vigorously shielded, the reasoning goes, from claims that could be deceptive. Arguments include the following:
1. Consumers have a fundamental ethical right to know what they’re buying, and even mildly ambiguous marketing techniques interfere with that right. If a box of breakfast cereal is marketed with a harmless and helpful bunny, then the ingredients of Trix cereal better be harmless and helpful (and not sugar bombs). Everyone agrees, finally, that advertisers have a right to free speech, but that right stops when it conflicts with consumers’ freedom to purchase what they really want.
2. Advertisers are just like everyone else insofar as they’re bound by an ethical duty to tell the truth. That duty trumps their obligation to sell products and help companies make profits.
3. Both advertisers and the manufacturing companies are duty bound to treat everyone including consumers as ends and not as means. The basic ethical principle here is that no one should be treated as an instrument, as a way to get something else. There’s no problem with advertising a product and allowing consumers to decide whether they want it, but when the advertising becomes deceptive, consumers are no longer being respected as dignified human beings; they’re being treated as simply means to ends, as ways the company makes money. Consumers become, in a sense, indistinguishable from the machines in the factory, nothing more than cogs in the process of making owners wealthy.
4. Purchasing a product is also the signing of an implicit contract between producer and consumer. The consumer gives good money and expects a good product, one in line with the expectations raised by advertising. Just as companies are right to apply drug tests to workers because those companies have a right to a full day’s good labor for a full day’s pay, so too when the consumer pays full price for a product it should fully meet expectations.
5. Though the idea of allowing marketers to say whatever they want may sound good because it allows consumers to maximize information about the products that are out there, the theory only works if consumers have massive amounts of time to study the messages from every producer before making every purchase. In reality, no one has that much time and, as a result, advertisers must be limited to making claims that are clearly true.
Conclusion. There’s a lot of space between truth and lies in advertising; there are many ways to not quite tell the whole truth. Both legally and ethically, the limits of the acceptable can be blurry.
Key Takeaways
• Deceitful advertising occurs along a range from exaggerations to direct falsehoods.
• Legal responses to deceitful advertising may be organized through the FTC.
• The degree of consumer legal protection depends on premises about the marketplace sophistication of the consumer.
• Ethical debates concerning deceitful advertising pit the rights of marketers to sell against the rights of consumers to know what they are purchasing.
Exercise \(1\)
1. What’s the difference between deceitful advertising and direct falsehoods?
2. Define the reasonable consumer standard for consumer protection. How is it different from the ignorant consumer standard?
3. What are two arguments in favor of granting marketers wide latitude to promote their products?
4. What are two arguments in favor of forcing marketers to stay very close to the pure truth when promoting their products? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/12%3A_The_Selling_Office-_Advertising_and_Consumer_Protection/12.02%3A_Do_Ads_Need_to_Tell_the_Truth.txt |
Learning Objectives
1. Define consumerism.
2. Discuss the power and problems surrounding advertising that creates desires.
3. Consider special issues surrounding advertising and children.
4. Investigate the penetration of advertising in life.
What Is Consumerism?
The word consumerism is associated with a wide range of ideas and thinkers, ranging from American economist John Kenneth Galbraith and his book The Affluent Society to the French postmodern philosopher Jean Baudrillard. While definitions of the word and responses to it vary, consumerism in this text is defined in two parts:
1. We identify ourselves with the products we buy. Consumerism goes beyond the idea that our brands (whether we wear Nike shoes or TOMS shoes, whether we drive a Dodge Charger or a Toyota Prius) are symbols of who we are. Consumerism means our products aren’t just things we wear to make statements. They are us; they incarnate the way we think and act.
2. If we are what we buy, then we need to buy in order to be. Purchasing consumer items, in other words, isn’t something we do to dispatch with necessities so that we can get on with the real concerns of our lives—things like falling in love; starting a family; and finding a satisfying job, good friends, and fulfilling pastimes. Instead, buying becomes the way we do all those things. The consumption of goods doesn’t just dominate our lives; it’s what we do to live.
The subject of consumerism goes beyond business ethics to include every aspect of economic life and then further to cultural studies, political science, and philosophy. Staying within business ethics, however, and specifically with advertising, the subject of consumerism provokes the following questions:
• Does advertising create desires (and is there anything wrong with that)?
• Do advertisers have a responsibility to restrain their power?
• Should there be different rules for advertising aimed at children?
• Is advertising too intrusive in our lives?
Does Advertising Create Desires (and Is There Anything Wrong with That)?
Our society is affluent. With the exception of marginal cases, all Americans today eat better, enjoy more effective shelter from winter cold and summer heat, are healthier, and live longer than, say, the king of France in 1750. In fact, necessity in the sense of basic life needs hardly exists. We struggle heroically to afford a better car than our neighbor, to have a bigger home than our high-school classmates, to be thin and pay the doctor for a perfectly shaped nose, and so on, but no one worries about famine. Our economic struggles aren’t about putting food on the table; they’re about eating in the most desirable restaurant.
How do we decide, however, what we want—and even what we want desperately—when we don’t truly need anything anymore? One answer is that we create needs for ourselves. All of us have had this experience. For our entire lives we lived without iPhones (or even without cell phones), but now, somehow, getting halfway to work or campus and discovering we left our phone at home causes a nervous breakdown.
Advertising plays a role in this need creation. Take the Old Spice body wash ad. Body wash as a personal grooming product was virtually unheard of in the United States until only a few years ago. More, as a product with specific characteristics, it’s hard to see how it marks an advance over old-fashioned soap. This absence of obvious, practical worth at least partially explains why the Old Spice ad provides very little information about the product and nothing by way of comparison with other, similar options (like soap). Still, the Old Spice body wash is a hit. The exact techniques the ad uses are a matter for psychologists, but as the sales numbers show, the thirty-second reel first shown during the Super Bowl has herded a lot of guys into the idea that they need to have it. Noreen O’Leary and Todd Wasserman, “Old Spice Campaign Smells Like a Sales Success, Too,” July 25, 2010, Adweek, accessed June 2, 2011, www.adweek.com/news/advertising-branding/old-spice-campaign-smells-sales-success-too-107588.
Is there anything wrong with that? One objection starts by pointing out that corporations producing these goods and selling them with slick ad campaigns aren’t satisfying consumer needs; they’re trying to change who consumers are by making them need new things. Instead of fabricating products consumers want, corporations now fabricate consumers to want their products, and that possibly violates the demand that we respect the dignity and autonomy of others. The principle, for example, that we treat others as ends and not means is clearly transgressed by any advertising that creates needs. First, guys out in the world aren’t being respected as “ends,” as individuals worthy of respect when corporations stop producing their required products better or more cheaply. Second, guys out in the word are being treated as means—as simple instruments of the corporations’ projects—when their desires are manipulated and used to satisfy the corporations’ desire to make money.
Another argument against this kind of desire-creating advertising starts from a rights approach. According to the theory that freedom is the highest good, we’re all licensed to do whatever we want as long as our acts don’t curtail the freedom of others. The argument could be made that using sophisticated advertising campaigns to manipulate what people want is, in effect, curtailing their freedom at the most fundamental level. Old Spice’s advertising strategy is enslaving people to desires that they didn’t freely choose.
A final argument against need creation with advertising is the broad utilitarian worry that consumers are being converted into chronically, even permanently unhappy people because they have no way to actually satisfy their desires. If you work to attain something you’ve been told you’re supposed to want, and the second you get it some new company enters with the news that now there’s something else you need, the emotional condition of not being satisfied threatens to become permanent. Like mice trapped on a running wheel, consumers are caught chasing after a durable satisfaction they can’t ever reach.
On the other side of the argument, defenders and advocates of desire-creating advertisements like the one Old Spice presented claim (correctly) that their announcements aren’t violating the most traditional and fundamental marketing duty, which is to tell the truth. The Old Spice ad, in fact, doesn’t really say anything that’s either true or false. Given that, given that there’s no attempt to mislead, the company is perfectly within its rights to provide visions of new kinds of lives for consumers to consider, accept or reject, buy or pass over.
Stronger, advocates claim that consumers are adults and attempts to shield them from ads like those Old Spice produced don’t protect their identity and dignity; instead, they deny consumers options. Consequently, ethical claims that ads aiming to generate new desires should be constrained actually violate consumer dignity by treating them like children. We should all be free, the argument concludes, to redefine and remake ourselves and our desires in as many ways as possible. By offering options, advertising is expanding our freedom to create and live new, unforeseen lives.
Do Advertisers Have a Responsibility to Restrain Their Power?
The Old Spice ad didn’t end after its thirty seconds of fame on the Super Bowl broadcast. The actor Isaiah Mustafa went on to became a Twitter sensation. By promising to respond to questions tweeted his way, he effectively launched a second phase of the marketing effort, one designed to stretch out the idea that body wash is big and important: it’s what people are talking about, and if you don’t know about it and what’s going on, you’re out of the loop, not relevant. The tone of the invitation to Twitter users to get involved stayed true to the original commercial. Mustafa asked people to “look for my incredibly manly and witty and amazing responses” to their questions. Meena Hartenstein, “Old Spice Guy Takes Web By Storm in Viral Ad Campaign, Creating Personalized Videos for Fans, Celebs,” New York Daily News, July 14, 2010, accessed June 2, 2011, www.nydailynews.com/entertainment/tv/2010/07/14/2010-07-14_old_spice_guy_takes_web_by_storm_in_viral_ad_campaign_creating_ personalized_vide.html.
On YouTube, Mustafa’s status went to instant legend: not only has his commercial been viewed about 20 million times (by people who actually want to watch and pay attention and at zero cost to Old Spice), there’s also a long list of copycat videos, derivative videos, spoof videos, and on and on. The depth of the advertising campaign is now virtually infinite. You could pass years watching and listening and reading the social media generated and inspired by the original commercial.
All that is advertising. It’s not paid, it’s not exactly planned, but it is part of the general idea. When Old Spice spent big money to get a Super Bowl slot for their ad, they weren’t only trying to reach a large audience; they were also hoping to do exactly what they did: set off a firestorm of attention and social media buzz.
Called viral advertising, this consumer-involved marketing strategy drives even further from traditional, informational advertising than the activity of branding. Where branding attempts to attach an attitude and reputation to a product or company independent of specific, factual characteristics, viral ads attempt to involve consumers and exploit them to do the company’s promotional work. When viral advertising is working, the activity of branding is being carried out for free by the very people the advertising is meant to affect. In a certain sense, consumers are advertising to themselves. Of course, consumers aren’t rushing to donate their energy and time to a giant corporation; they need to be enticed and teased. The Super Bowl ad with its irresistible humor and sex-driven come-on does that—it provokes consumers to get involved.
Viral ads—and the techniques of public enticement making them spread contagiously—come in many forms. One ethical discussion, however, surrounding nearly all viral advertising can be framed as a discussion about knowledge and resource exploitation. Two critical factors enabled Old Spice, along with its advertising agency Wieden+Kennedy, to generate so much volunteer help in their endeavor to get the body wash buzz going:
1. Knowledge of consumer behavior
2. Tremendous resources—especially money and creative advertising talent—that allowed them to act on their knowledge
Compared with the typical person watching a TV commercial, the raw power of Old Spice is nearly immeasurable. When they aim their piles of money and sharp advertising experts toward specific consumers, consumers are overwhelmed. Without the time required to learn all the skills and strategies employed by today’s advertisers, they literally don’t even know what’s hitting them. From that fact, this ethical question arises: Don’t today’s sophisticated marketers have a responsibility to inform consumers of what they’re up to so that potential purchasers can at least begin to defend themselves?
Making the last point stronger, isn’t the economic asymmetry—the huge imbalance in monetary power and commercial knowledge favoring today’s professional advertisers—actually an obligation to restraint, a responsibility to not employ their strongest efforts given how comparatively weak and defenseless individual consumers are? The “yes” answer rests on the duty of fairness—that is, that we treat equals equally and unequals unequally. In this case, the duty applies to companies just as it does to people. Frequently people say to large, muscle-bound characters caught up in a conflict with someone smaller, “Go pick on someone your own size.” It’s simply unfair to challenge another who really has no chance. This duty comes forward very graphically on a video snippet from MTV’s Jersey Shore when a thin girl attacks the physically impressive Ronnie. He just shoves her aside. When her boyfriend, however, who’s about Ronnie’s size and age, shows up and starts swinging, he ends up getting a good thumping. Leaving aside the ethics of fistfights, it doesn’t take profound thought to see that Ronnie understands his superior physical power is also a responsibility when harassed by a comparative weakling to hold himself in check. Nicholas Graham, “Jersey Shore Fight: Ronnie Gets Into Vicious Fight,” Huffington Post, August 1, 2010, accessed June 2, 2011, http://www.huffingtonpost.com/2010/01/08/jersey-shore-fight-ronnie_n_416259.html.
While the case of Old Spice and Wieden+Kennedy isn’t quite as transparent as Ronnie on the street, it does obey the same logic: all their power and marketing expertise is both a power over consumers and an equally forceful responsibility not to exercise it. Compare that situation with the famous “I’m a Mac, I’m a PC” advertising campaign. No one objects to powerhouse Apple taking some figurative swings at powerhouse Microsoft since that company clearly has the means to defend itself. When a corporation manipulates innocent and relatively powerless individual consumers at home on the sofa, however, it’s difficult to avoid seeing something unfair happening.
The argument on the other side is that consumers aren’t powerless. There’s no real imbalance of might here because consumers today, armed with their Twitter accounts and Facebook pages, are perfectly capable of standing up to even the mightiest corporations. Viral messaging, in other words, goes both ways. Old Spice may use it to manipulate men, but individual men are perfectly free and capable of setting up a Facebook group dedicated to recounting how rancid Old Spice products actually are. Beneath this response, there’s the fundamental claim that individuals in the modern world are free and responsible for their own behavior, and if they end up voluntarily advertising for Old Spice and don’t like it, they shouldn’t complain: they should just stop tweeting messages to Isaiah Mustafa.
Further, the proposition that consumers need to be protected from Old Spice is an infringement on the dignity of those who are out in the world buying. Because today’s consumers connected to social media are alert and plugged in, because even a solitary guy in pajamas in his basement running his own YouTube channel or Facebook group can be as influential as any corporation, attempts to shield him are nothing less than disrespectful confinements of his power. Protection, in this case, is just another word for condescension.
Should There Be Different Rules for Children?
The discussion of knowledge and resource exploitation leads naturally to the question about whether children should be subjected to advertising because the knowledge imbalance is so tremendous in this particular case.
According to a letter written by a number of respected psychologists to their own professional association, children should receive significant shielding from advertising messaging. The first reason is a form of the general concern that advertising is creating desires as opposed to helping consumers make good decisions about satisfying the desires they have: “The whole enterprise of advertising is about creating insecure people who believe they need to buy things to be happy.” Rebecca Clay, “Advertising to Children: Is it Ethical? Monitor On Psychology 31, no. 8 (September 2000), 52, accessed June 2, 2011, www.apa.org/monitor/sep00/advertising.aspx.
The problem with advertising that creates insecurity is especially pronounced in the case of society’s youngest members because once that attitude of constant need and consequent unhappiness is bred into these consumers, it’s difficult to see how it will be removed. Since they’ve known nothing else, since they’ve been taught from the very start that the natural condition of existence is to not have the toys and things that are needed, they have no way of escaping into a different (nonconsumerist) way of understanding their reality. Finally, if this entire situation is set inside a utilitarian framework, it’s clear that the ethical verdict will fall somewhere near reprehensible. If, as that ethical theory affirms, moral good is just any action contributing to social welfare and happiness, then advertisements consigning children to lifetime dissatisfaction must be prohibited.
The second part of the psychologists’ argument elaborates on the condition of children as highly vulnerable to commercial message techniques. Children aged three to seven, for example, gravitate toward the kind of toys that transform themselves (for example, Transformers). Eight- to twelve-year-olds love to collect things. Armed with these and similar insights about young minds, marketers can exploit children to want just about anything. The virtual defenselessness of children, the point is, cannot be denied.
Still, there is a case for child-directed advertising. It’s that where children are defenseless, parents have a responsibility to step in. First, they can turn off the TV. Second, no young child can buy anything. Children depend on money from mom and dad, and to the extent that parents enable children to live their advertising wants, it’s parents who are at fault for any feelings of insecurity and dissatisfaction affecting their kids.
Whether advertising aimed at children is right or wrong, the stakes are certainly high. Children under twelve are spending around \$30 billion a year, and teenagers are hitting \$100 billion in sales. Rebecca Clay, “Advertising to Children: Is it Ethical? Monitor On Psychology 31, no. 8 (September 2000), 52, accessed June 2, 2011, www.apa.org/monitor/sep00/advertising.aspx.
Are Ads Too Intrusive in Our Lives?
Another sentence from that letter written by concerned psychologists indicates a distinct area of ethical concern about advertising: “The sheer volume of advertising is growing rapidly and invading new areas of childhood, like our schools.” Rebecca Clay, “Advertising to Children: Is it Ethical? Monitor On Psychology 31, no. 8 (September 2000), 52, accessed June 2, 2011, www.apa.org/monitor/sep00/advertising.aspx.
It’s not just children in their schools. We all go to concerts at the American Airlines Center, our shirts and shoes are decorated with the Nike swoosh, public parks are sponsored by corporations, the city bus is a moving billboard, the college football championship will be determined at the FedEx Orange Bowl. Every day it’s harder to get away from ads, and each year the promotions and announcements push closer to those parts of our lives that are supposed to be free of economic influence. Maybe someday we’ll attend Mass at the Diet Coke Cathedral, weigh guilt and innocence in the Armor All courthouse, elect senators to vote in the Pennzoil chamber.
And maybe that’s OK. The push of advertising into everything is a proxy for a larger question about the difference between business life and life. It could be that, at bottom, there is no difference. We are Homo economicus. The antiromanticists were right all along: love can be bought with money, fulfillment is about consuming, and that bumper sticker “He who dies with the most toys wins” is true.
Since serious thought about what really matters in life began in Greece 2,500 years ago, people have promoted the idea that there are more important things than money and consumption. Those usually ill-defined but nonetheless more important things have always explained why most poets, artists, priests, and philosophy professors haven’t had much in the way of bank accounts. Possibly, though, it’s the other way. Maybe it’s not that there are more important things in life that lead some people away from wealth and consumption; maybe it’s that some people who don’t have much money and can’t buy as much as their neighbors explain away their situation by imagining that there are more important things.
Who’s right? The ones who say money and economic life should be limited because the really important things are elsewhere, or the ones who say there are no other things and those who imagine something else are mainly losers? It’s an open question. Whatever the answer, it will go a long way toward determining the extent to which we should allow advertising into our lives. If there’s only money and consumption, then it’s difficult to see why the reach of the branding factories and viral marketers should be significantly limited. If, on the other hand, there’s life outside the store, then individuals and societies wanting to preserve that part of themselves may want to constrain advertising or require that it contribute to noneconomic existence.
Key Takeaways
• Consumerism places our entire life within the context of consumer goods and services.
• Advertising can create desires.
• Advertising creating desires raises questions about whether ads violate consumers’ dignity and rights.
• The knowledge and financial power of companies (and their ad agencies) may also be an obligation for restraint.
• Children are especially vulnerable to sophisticated advertising and may require special protections.
• Discussion of the advertising that creates needs is a proxy for a larger discussion about the role of money and consumption in our lives.
Exercise \(1\)
1. Put into your own words the definition of consumerism.
2. How can an ad create a desire?
3. Why might an advertiser seek to create a desire?
4. Make the case that ads that create desires violate a consumer’s basic rights.
5. Why might a consumer want advertisers to create desires?
6. What is a viral ad?
7. With reference to the concept of economic asymmetry, why is advertising aimed at children the subject of special concern?
8. Why might an advertising company feel obligated to limit the places in which its work appears in the name of protecting the noneconomic parts of our lives?
9. Why might someone want advertising to be everywhere? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/12%3A_The_Selling_Office-_Advertising_and_Consumer_Protection/12.03%3A_We_Buy_Therefore_We_Are-_Consumerism_and_Advertising.txt |
Learning Objectives
1. Delineate the issue of consumer protection from defective goods and services.
2. Outline five conceptions of the consumer.
3. Consider the ethics of consumer protection surrounding each conception of the consumer.
Google Search: Make Money on the Stock Market
One of the top results of a Google search for “make money on the stock market” links you to a page called 2stocktrading.com. It claims, “If you just follow my technique, then I guarantee you will be able to turn \$2000 into \$1.7 Million in just 1.9 years!”
People turn small amounts into large amounts fast on Wall Street. It happens every day. Many of those people, however, have spent years in school studying economics and business and then decades more studying data and preparing for a speculative opportunity. That studious patience may be a good way to find success, but it isn’t the 2stocktrading.com recommendation. According to them, “You don’t need to spend hours reading charts, doing technical analysis and stuff like that.”
So what do you do to prepare for sudden riches? You’ve got to buy a special book that they sell on the website. Then,
you follow 5 simple steps explained in the book. Within 10 minutes, you have found a stock trade that is bound to make you money in any market condition…Go make coffee. Have a little breakfast. And wait for the market to open…Call your broker to place an order.
That’s it…Your job is done for today.
Trust me.
Of every one hundred people who read the pitch from 2stocktading.com in this business ethics textbook, how many do you think will take a second to check out the site? And of that group, what percentage will actually spend some time reading through the whole page? And of that group, which percentage will end up sending in money?
Everybody would like to know the answer to that last question for this reason: everyone has been ripped off, and afterward, everyone has looked at themselves and asked, “Well, was it my fault?” Sometimes the answer is disagreeable, and it’s comforting to know that at least some people out there—like the ones sending in money to 2stocktrading—are even more gullible.
The business ethics surrounding the consumer mainly concerns gullibility, mistreatment of the consumer, and responses to the mistreatment. The questions are about how much freedom consumers should have to spend their money and how much responsibility suppliers should take for their goods and services. One way of organizing the answers is by considering five conceptions of the consumer, five ways of arranging the rights and responsibilities surrounding the act of spending money:
1. The wary consumer
2. The contracting consumer
3. The protected consumer
4. The renegade consumer
5. The capable consumer
The Wary Consumer
Caveat emptor is Latin; it translates as “Let the buyer beware.” As a doctrine, caveat emptor means the consumer alone is responsible for the quality of the product purchased. If, in other words, you send your money to 2stocktrading.com and you end up losing not only that but also the cash invested in disastrous stock choices, that’s your problem. You don’t have any claim against this particular get-rich-quick scheme. And if you don’t like the results, that only means you should have been a more careful consumer.
The doctrine of caveat emptor entered the American legal lexicon in 1817 (Laidlaw v. Organ). Since then, the legal tide has flowed in the other direction: toward consumer protection and the idea that offering a good or service for sale is also, implicitly, the offer of some kind of guarantee. If a product doesn’t do what a reasonable person expects, then there may be room for a legal claim against the seller.
On the ethical front, caveat emptor sits at one extreme of the buyer-seller relation. It’s what you have when you buy a used car marked As Is. Even if it’s a lemon, you’re stuck with it. As far as justifying this view of the consumer and mounting an argument that our economic life ought to be organized by the idea that when buyers hand over their money, they get their item and nothing else, there are several routes that may be followed:
• Caveat emptor maximizes respect for the consumer. By placing all responsibility in the consumer’s hands, a high level of dignity and freedom is invested in those who buy. It’s true that when there’s a rip-off, there’s no recourse, but it’s also true that the consumer is allowed to make decisions based on any criteria he or she sees fit. The case of 2stocktrading.com is a good example. Reading about the scheme, it’s normal to be tempted to say, really, these guys shouldn’t be allowed to advertise their service. What they’re claiming is clearly untrue (if their stock-picking system really worked so well, they’d spend their time picking stocks, not trying to sell other people ideas about how to pick stocks). And it’s true that were consumers banned from sending money in, more than a few would be better off. But do we really want a society like that, one where we don’t get to make our own choices, even if they’re bad ones? A critical component of showing respect for others is allowing them to mess up. It’s worth, the argument closes, allowing those mess ups if what we get back for them is consumers endowed with the dignity of making their own decisions.
• Another argument justifying caveat emptor is that it maximizes a certain kind of economic efficiency. When deals are done, they’re done and everyone moves on. This allows two kinds of savings. First, there are no expensive lawsuits where everyone pays and mainly lawyers walk away with the cash. Second, though it’s impossible to put a number on the cost, it’s certain that a huge amount of resources are devoted in our economy today to warnings and similar that are meant to protect companies against consumer claims of fraud and abuse and lawsuits. Take, for example, the TV ads we see for prescription drugs. Sometimes it seems like half the airtime is devoted to reciting warnings and complications associated with the medication. In a world of pure caveat emptor, those kinds of efforts could be minimized because sellers wouldn’t have to worry so much about getting sued. With respect to ethics, finally, it may be possible to argue here that maximizing economic efficiency is also the best way to maximize a society’s happiness, and if it is, then the doctrine of caveat emptor is sanctioned by utilitarian theory.
On the other side, there are also solid ethical arguments against envisioning consumers as protected only by their own wariness.
• An ethics of care sets the maintenance of a community—of its relationships and unity—as the highest value. If that’s the final definition of good, if what we seek in the business world is smooth and continuing cooperation everywhere along the line from the production to the sale and finally to the use of products, then it’s difficult to see how sellers could wash their hands after a transaction, or why buyers would be restrained from complaining when things don’t work out the way they were supposed to.
• In our society, an ethics based on virtue also stands against the caveat emptor model of consumption. Proponents of virtue ethics typically cite senses of fairness and civility as key components of a good ethical life. If they are, it seems clear that customers who don’t receive what they honestly thought they were getting should be listened to and compensated, not ignored and spurned.
In conclusion, caveat emptor envisions consumers as free and empowers them to do as they wish. However, by freeing sellers to be as unscrupulous as they like, it may create an economic society that seems more savage than civil.
The Contracting Consumer
The contractual view of the consumer sees transactions as more than a simple passing of money one way and a good or service the other. The transaction is also the creation of an implicit contract. It’s true that nothing may be written on a piece of paper or signed, but the contract’s terms may nonetheless be deduced from the transaction itself. In order to begin deducing, the nature of a contractual relationship should first be summarized in general form. Entering into a contract implies the following three requirements:
1. Freedom. Neither party may be forced into the agreement. One of the memorable scenes from the Godfather movies involves the mafia’s attempt to win a movie role for young Frank Sinatra. The Hollywood executive resists the casting, until he wakes up one morning with the severed head of his favorite horse in his bed. A contract is quickly sent out. That’s not a true story, but it’s an example of entering a contract under duress. A more subtle violation of contractual freedom occurs on the 2stocktrading web page. If you scroll to the bottom you find the price of the product is about \$200, but if you buy immediately you’re eligible for a half-price discount. The aim here is to limit the consumer’s freedom to think things through before entering into a purchasing contract by forcing a yes-no decision right now.
2. Information. Both buyers and sellers must have reasonably complete knowledge of the agreement they together enter. The issues here range from simple to complicated. If the price, for example, is set in dollars, does that mean US dollars or the Canadian version? More thorny would be the question as to what exactly you receive when you send in your money to 2stocktrading.com. They claim you’ll get the stock-picking secrets, but what exactly does that mean? Is it a textbook in economics, a subscription to the Wall Street Journal, a crystal ball? If you go through the company’s web page carefully, you get the idea that a set of books will be mailed your way, but again, exactly how these books convey secret knowledge is harder to see.
3. Honesty. Both sides have to tell the truth. Consumers who send in checks must have money in their accounts. Sellers who promise stock tips that will make you rich must, in fact, send you good stock tips.
The vision of the consumer as entering a contractual relationship essentially moves ethical questions into the legal realm. What’s morally right or wrong becomes a matter of contract law, and decisions made on the ethical front loosely parallel those that would be taken in the courts.
The ethical work that needs to be done here occurs in the deduction of exactly what terms and clauses make up the implicit contract as it’s implied by the circumstances of the agreement. In the field of law, of course, we know what the contract’s terms are because they’re actually spelled out on a piece of paper. In the case of the contractual view of the consumer, it will be necessary to start with a specific ethical theory, and move from there to the conceiving of an agreement entered into by both sides.
An ethical theory of traditional duties, which values honesty highly, may move all the claims made on the 2stocktrade.com web page directly over to the implicit contract. If, it follows, the people selling the stock-picking service say you’ll get rich in two years by following their recommendations and you follow them and you don’t get rich, the sellers have not fulfilled their contract. Both economically and ethically, they haven’t held up their end of the bargain. At this point, the concept of an implied warranty activates. An implied warranty, just like an implicit contract, elaborates what consumers may claim from sellers if the good or service fails to meet expectations. In this case, one where the implicit contract guaranteed wealth, it seems obvious that consumers who don’t make any money should get their original purchase price back. They may also be able to claim that any money lost on the stock market should be refunded because it was invested underneath the assumption that it would produce a gain. At the outside extreme, they might be able to demand the wealth they were supposed to receive for their investments.
Looking at this situation differently—which means using a different ethical theory to produce the terms of an implicit contract between 2stocktrading.com and a consumer—a culturalist ethics may not be quite so stringent. A culturalist ethics accords right and wrong with the habits and customs of a society. And in America today, there’s a common understanding that in a free market, sellers are sometimes going to get a little overenthusiastic about their products. Of course consumers have a right to expect some truth from advertisements, but there’s also an agreement that exaggerations occur. In this case, the implicit contract would require that stock-picking tips actually be delivered, but it might not require that the people who use them actually get rich or make any money at all. If, in other words, reasonable people in our society who read the web page don’t come away believing they’ll really rake in the cash by using the stock-picking techniques, then the implicit contract arising between seller and buyer doesn’t include that guarantee.
Regardless of how the implicit contract—and consequent implied warranty—are construed, there’s a significant disadvantage to this approach: ambiguity. Law firms earn their entire income by disputing what written contracts actually mean in the real world. If even perfectly explicit and signed agreements between buyers and sellers don’t yield easy determinations about the obligations imposed on the two sides, then answering those questions for implicit contracts, ones where nothing is written, is going to be tremendously difficult. The theory of the consumer as entering a contractual relationship with the seller certainly makes sense, but in practice, it may not help resolve problems.
The Protected Consumer
Most economic transactions don’t threaten grave losses even when they go wrong. You buy a half gallon of milk at the grocery store, bring it home, and find the package was slightly punctured so the milk is curdled. You buy a pen and no ink flows. You pay for a nice haircut and get butchered. These kinds of economic hiccups occur all the time, and the defects normally don’t matter too much. The defect definitely does matter, however, when you buy a car and a design error causes the gas pedal to get stuck, leading to wild, unbreakable speeding and entire families dying in flaming wrecks. While it’s unclear how many people have been victims of Toyota’s gas pedal manufacturing error, it has become stuck at full acceleration on multiple occasions and has caused real human suffering completely incomparable with the kinds of petty losses typical consumers absorb every day. “Toyota to Replace 4 Million Gas Pedals After Crashes,” Fox News, November 25, 2009 accessed June 2, 2011, www.foxnews.com/us/2009/11/25/toyota-replace-million-gas-pedals-crashes.
Another important aspect of buying a Toyota, or any car, is that it’s a complex transaction. That means there’s a large distance between the individual who actually takes your money, and the people in faraway plants who physically made the car. In the case of 2stocktrading.com, it may well be that the people who invented the stock-picking system get the money directly when you hit the Internet “Buy” button. A car, however, is typically purchased in a dealership from a salesman who may not even know where the car he’s selling is made. Even if he does know, he certainly can’t tell you where all the components came from. In today’s interconnected world, more and more products are like cars—they’re composed of parts that come from all over the place and then they’re shipped halfway across the country (or the world) for sale by people who have nothing to do with any design or manufacturing flaws.
These two factors—the possibility of severe injury coupled with the difficulty in locating who, exactly, is to blame—support the proposal that in some cases ethics may not be enough to protect consumers. Legal protections with sharp teeth could work better. These protections generally move along two lines: manufacturer liability and government safety regulation.
Manufacturer liability is the consumer right to sue manufacturers—and not just the local dealership with which a sales contract is signed—for injuries caused by a defective product. As for specific types of defects incurring liability suits, there are three:
1. Design defects are errors in the product’s blueprint. The physical manufacturing, in other words, may be perfect, but because the design isn’t, consumers may be harmed.
2. Manufacturing defects are part of the production process. In this case, a product may be generally safe but dangerous in a specific instance when it comes off the assembly line missing a bolt.
3. Instructional defects involve poor or incomplete instructions for a product’s safe use. The product may be designed and built well, but if the instructions tell you it’s OK to use the blow-dryer in the shower, there could be problems.
The legal origin of manufacturer liability is MacPherson v. Buick Motor Company. In that 1916 case, Donald MacPherson was injured when his Buick veered out of control. A defective wheel caused the accident, one that Buick purchased from another company. Buick argued that they weren’t liable for MacPherson’s injury for two reasons: a quasi-independent dealership, not Buick itself, sold the car, and Buick didn’t even make the wheel that failed. The court ruled against both arguments. The result was a concept of legal liability extending beyond explicit contracts and direct manufacturing: the concept of due care recognizes that manufacturers are in a privileged position to understand the potential dangers of their products and have, therefore, an obligation to take precautions to ensure quality. Those obligations remain in effect regardless of who ultimately sells the product and no matter whether a subcontractor or the larger corporation itself made the defective part.
Over the last century, the notion of due care has strengthened into the legal doctrine of strict product liability. This holds that care taken by a manufacturer or supplier—no matter how great—to avoid defects is immaterial to court considerations of liability. If a product is defective and causes harm, liability claims may be filed no matter how careful the manufacturer had been in trying to avoid problems.
Proponents of these legal protections argue that social welfare is improved when companies exist under the threat of serious lawsuits if their products cause damage. Critics fear that liability suits can be unfair: companies may act in good faith to produce safe products, but nonetheless fail, and be forced to pay massive amounts even though they took all precautions they honestly believed necessary.
Government safety regulation is the second main legal route toward a protected consumer. As is the case with liability protection, government regulation has expanded over the last century. Key moments include the establishment of the National Highway Traffic Safety Administration in 1970 and the Consumer Product Safety Commission in 1972. These federal agencies are charged with advocating for consumers by imposing regulations, and then enforcing them through the agencies’ legal arms. In actual practice, the agencies frequently act in cooperation with manufacturers to ensure public safety. For example, when news broke that Toyota gas pedals were sticking, causing runaway vehicles, the NHTSA pressured Toyota to redesign the gas pedal and then recall the malfunctioning vehicles to have their pedals replaced. “Toyota Announces Fix for Gas Pedal Sticking Problem,” US Recall News, November 26, 2009, accessed June 2, 2011, www.usrecallnews.com/2009/11/toyota-announces-fix-for-gas-pedal-sticking-problem.html.
Regulatory action resembles the extension of liability protection in that proponents believe the measures serve the social welfare. People live better when governmental forces work to ensure protection from defective products. Almost inevitably, the argument in the background is a version of utilitarianism; it’s that the ethical good equals whatever actions serve the public welfare and happiness. If society as a whole lives better with strict regulations in effect, then imposing them is good.
Critics fear that the cost of these regulations may become burdensome. In straight economic terms, an argument could be mounted that the dollars and cents spent by corporations in their attempts to comply with regulations are actually superior to the social cost of letting some defective goods out into the marketplace. There’s a possibility, here, to meet advocates of regulation on their own ground by claiming that at least in monetary terms, society is better off with less regulation, not more. It’s much easier, however, to put a price tag on the cost of complying with safety rules than it is to measure in terms of dollars the cost of injuries and suffering that could have been avoided if more stringent safeguards had been in place. (Of course, if you happen to be one of those few people who gets a seriously defective item—like a car that speeds out of control—then for you it’s pretty clear that the regulations are recommendable no matter the cost.)
Another argument cautioning against regulatory action is that bureaucratic overreach threatens legal paternalism. Legal paternalism is the doctrine that, just as parents must restrict the freedom of their children in the name of their long-term welfare, so too regulators in Washington, DC (or elsewhere) must restrict the freedom of citizens because they aren’t fully able to act in their own self-interest. One simple example is the seatbelt. In the late 1960s, federal action required the installation of seatbelts in cars. Subsequently, most states have implemented laws requiring their use, at least by drivers. Society as a whole is served by these regulations insofar as injuries from traffic accidents tend to be reduced. That doesn’t change the fact, however, that people who are alone in their cars and presumably responsible for their own welfare are being forced to act in a way they may find objectionable. Parallel discussions could be followed on the subject of motorcycle helmets, bicycle helmets, and similar.
Conclusion. Liability lawsuits against manufacturers, together with government regulations, protect consumers from dangerous goods and services. The protections cost money, however, and regulations may seem intrusive or condescending to some buyers.
The Renegade Consumer
The best defense can be a good offense. That’s probably the idea the owner of a chronically breaking-down Range Rover had when he parked his car on a public street in front of the dealership where he bought it and pasted bold letters on the side announcing that the car is a lemon. Probably, the display put a dent in the dealership’s business. “Range Rover Owner Advertises Faults On Lemon Parked Outside Dealer,” Jalopnik, June 3, 2009, accessed June 2, 2011, http://jalopnik.com/5277286/range-rover-owner-advertises-faults-on-lemon-parked-outside-dealer.
It was work and sacrifice for the car owner, though. Whoever it was had to hatch the plan and then go out and buy stick-on lettering to spell the message on the Range Rover’s side. Then it was necessary to give up use of the car for the duration of the protest. (It also might have been necessary to constantly plug a parking meter with coins.) Regardless of the cost, the renegade consumer seeks justice against product defects by going outside the system. Instead of making ethical claims against producers based on the idea of an implicit contract, and instead of seeking refuge underneath governmental protection agencies, this kind of buyer enters a no-holds-barred battle against (perceived) dirty sellers.
Parking a car marked lemon in front of the dealership that sold it is an old—and potentially effective—maneuver. Today’s social media, however, allows newer strategies with possibly higher impacts and less inconvenience. One example is Ripoff Report, a website allowing consumers to post complaints for all to see. Browsing the page, it takes only a moment to grasp that the site compiles more or less unedited consumer rebellions. There are stories of being gypped by department stores, robbed by banks, defrauded by plumbers, and nearly everything imaginable. People can add their own comments, and a convenient search box allows anyone to get a quick check on any company they may be considering doing business with. The website’s tagline, finally, is very appropriate. It reads, “Don’t let them get away with it. Let the truth be known!” Ripoff Report home page, http://www.ripoffreport.com.
These two sentences correspond well with the two ethical categories into which the renegade consumer naturally falls:
• The imperative “don’t let them get away with it” fits the conception of the renegade consumer as acting in the name of retributive justice.
• The imperative “let the truth be known!” fits the conception of the renegade consumer as a consumer advocate.
Retributive justice proposes that it’s ethically recommendable to seek revenge against those who have wronged you. “You cost me time, money, and trouble,” the logic runs, “and now I’ll return the favor.” The notion is probably as old as humanity, and it appears in many of history’s oldest texts. (The Bible’s Matthew 5:38 contains the proverbial “An eye for an eye and a tooth for a tooth.”)
Two aspects of retributive justice are significant. First, there’s a strong sense of proportionality in the idea. The code isn’t “A life for an eye” because the goal of retributive justice is to make things even again; it’s to restore a balance that was there before the problematic transaction. Retributive justice is a theory of proportional revenge. In the case of the lemon Range Rover, it seems about right that a dealership that refuses to fix (or replace or refund) a client’s defective car should in turn see losses to its business that approximately equal the money they save by mistreating consumers. The second point to make about the notion of retributive justice is that it fits within and is a subset of the duty to fairness. What drives retributive justice is a notion that the two sides of an economic exchange should be treated in the same way, equally.
These two characterizations of retributive justice are important because they separate the calculated act of vengeance from being nothing more than a blind and angry outburst. It’s normal when we’ve been wronged to want to simply strike out at the one who’s mistreated us. Probably, there’s a good bit of that anger behind the Range Rover owner and many of the rip-off reports. What makes those acts also ethically respectable, however, is their containment within the rules of proportionality and the duty to fairness.
The renegade consumer can also find an ethical slot in the category of consumer advocate. When the Ripoff Report asks contributors to let the truth be known, reports are enlisted not as individuals seeking revenge but as wronged consumers performing a public service. Here, the rule of fairness is not in effect; instead, it’s the utilitarian idea of the general good. If what ought to be done is just that which brings the greatest happiness to the greatest number, then the public calling out of car dealerships that don’t stand behind their product becomes a public utility or good. Renegade consumers become consumer advocates when they help others avoid their fate.
Conclusion. Renegade consumers are the mirror image of caveat emptor consumers. Both place extremely high levels of responsibility in the hands of the buyer. The difference is that the caveat emptor vision places that entire responsibility in the consumers’ buying judgment and so disarms them: it places an ethical restriction against consumer complaints because the entire transaction process is wrapped in the idea that before anything else the consumer should be wary about what’s being purchased. Renegade consumers also take full responsibility, but their obligations come at the end of the process, not the beginning: they rebalance the scales after a seller tries to get away with taking money for a defective product. Instead of swallowing their loss, renegade consumers act to make sure that the seller who cheated them pays a price.
The Capable Consumer
The capable consumer is a free market ideal. The combined economic-ethical notion underneath it is that business functions most smoothly—and thus produces quality of life at a maximum pace—when consumers play their marketplace role efficiently. Their marketplace role is to use purchasing decisions to reward good companies, ones that produce better goods at a lower cost, while penalizing those companies producing inferior goods. As successful companies grow, and as poor performers fall away, the general welfare improves: products do their jobs more satisfyingly, and people gain more disposable income for pleasure spending (because necessities will be less expensive). If, finally, right and wrong in the economic world is about bringing the greatest good and happiness to the most people, then the marketplace economy supports this moral demand: a society should do everything possible to perfect the consumer. The perfected consumer is
• able,
• informed,
• free,
• rational.
The able buyer is sufficiently experienced to manage marketplace choices. Just about everyone has been taken in at one point or another by unrealistic promises like those made on the 2stocktrading.com web page. The difference between the incapable and the capable is the ability to learn; it’s a kind of acquired instinct that sets off warning signals when an offer sounds too good: it might be too good to be true. Specifically on the stock-picking deal, able consumers don’t need to carefully study the whole spiel before realizing that, probably, the best thing to do is close the web page.
The informed buyer is sufficiently knowledgeable about a specific product category to make a good purchasing choice from within the various options. Different types of items, of course, require different levels of expertise. Making a good decision about a garage door opener is much easier than making a good decision about a car because the latter is so much more complicated and filled with highly specialized components. For example, Dodge spends a lot of time lauding their cars and trucks as including a hemi, but not many people understand what the actual benefits of that feature are. In fact, many people don’t even know what a hemi is. It’s always possible, of course, to learn about the intricacies of car engines, but in the real world of limited time, qualifying as an informed buyer requires only one of these two skills: either you know a lot about what you’re buying, or you learn which sources of information can be trusted. The search for a trustworthy source may lead to Consumer Reports magazine or Ripoff Report or something else, but the result should be a purchasing decision guided by real understanding.
The free buyer has choices. No amount of education about car quality will help anyone who only has one product to select. Most consumer items, however, do provide choices—abundantly. Standing in front of the shelves in any supermarket shows that the ideal of the consumer as free is, to a large extent, satisfied in our society. Still, there are exceptions. Cable TV and phone services can be limited in certain areas, as can electricity providers and sanitation services.
Rational buyers use their experience and information to make good choices. For the qualities of the ideal consumer to cash out, they must be orchestrated by careful thought. Of course this hardly seems worth mentioning in the abstract. All buyers are perfectly rational when they’re reading a textbook section about buying. It’s easy to be cold and analytical sitting on a sofa. The problem comes when the actual buying is happening. Dealers use all kinds of tricks and techniques to get consumers to, at least momentarily, suspend their good judgment and leap. One of the most common is the disappearing deal, which can be found on the 2stocktrading.com site and almost inevitably appears in the car buying experience. The salesman always has some special opportunity that you can get now, but if you wait until tomorrow, well.…Sometimes the claim is that there’s a sale on, but it’s ending tonight. Or there’s only one left in stock and another customer has been asking about it. The salesman shakes his pen at you and pushes the contract across the desk and the car right behind him is gleaming and new and in those moments the capable consumer is the one who takes a deep breath.
Conclusion
Most ethical questions surrounding consumers are about how much freedom they should have to spend their money. In the case of the wary consumer—the caveat emptor buyer—freedom is maximized, but the dealer takes no responsibility for what’s sold. In the cases of the contracting, protected, and renegade consumer, buyers sacrifice some of their freedom in return for the guarantee that if a good is defective, they’ll have some recourse against the dealer. In many cases, the freedom that consumers lose is minimal or even positive (most people are happy to not be free to buy a lemon car).
It’s inescapably true, however, that when you force dealers to stand behind what they sell, there are goods and services that they won’t bring to market. This newspaper story, for example, relates how it came to pass that holiday season cookie makers in California had to make do one December without those little silver ball sprinkles that frequently decorate the season’s cookies. A crusading lawyer had decided the balls might be harmful, and the threat of a lawsuit caused the item to be removed from store shelves. Carol Ness, “Bay Area Faces Holidays Without Little Silver Balls on Baked Goods,” San Francisco Chronicle, December 23, 2003, accessed June 2, 2011, http://articles.sfgate.com/2003-12-23/news/17524040_1_dragees-holiday- cookies-silver-balls. Probably, most people were able to enjoy their holiday celebrations just fine without the sprinkles, but the stakes go up when drug manufacturers are forced to consider pulling effective diabetes drugs like Avandia off the market because of a discovery that it may increase the risk of heart attacks. Andrew Clark, “Relief for GlaxoSmithKline as US Regulators Reject Ban on Avandia,” Guardian, July 15, 2010, accessed June 2, 2011, http://www.guardian.co.uk/business/2010/jul/15/glaxosmithkline-avandia-fda-expert-committee.
Key Takeaways
• Wary consumers are safeguarded from defective goods and services only by their own caution. They enjoy maximum freedom in the marketplace and suffer minimal protection.
• The contracting consumer is protected from defective goods and services by the affirmation that their purchase is also an implicit contract with the seller guarantying quality similar to expectations.
• The protected consumer is safeguarded from defective goods and services by liability lawsuits and governmental regulatory action.
• The renegade consumer takes individual action to penalize sellers whose products fail to meet expectations.
• The capable consumer minimizes the need for buyer protection while maximizing a market economy’s efficient functioning.
Exercise \(1\)
1. What does caveat emptor mean?
2. What are some purchases that are typically made within a consumer ethics of caveat emptor?
3. What is an implicit contract? How is it created from a particular transaction?
4. What are the two main ways that consumers are backed up by legal protections?
5. How do renegade consumers create protections against defective products?
6. What characteristics make up a capable consumer? | textbooks/biz/Business/Business_Ethics/Book%3A_The_Business_Ethics_Workshop/12%3A_The_Selling_Office-_Advertising_and_Consumer_Protection/12.04%3A_Consumers_and_Their_Protections.txt |
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