Sustainability

BYUethics.org has a link to an article about sustainability[1]. I found the article interesting because it confirms some of the thoughts I wrote about Corporate Social Responsibility (CSR) at the beginning of this month. The columnist Gael O’Brien quotes “For sustainability to take hold and be real in a company what is done must make business sense in terms of the long-term needs of the business and creation of value for shareholders”, “doing something good for the world, the community, or other stakeholders needs to be linked with other corporate objectives -- including cost reduction, quality, risk management, reputation, and being an employer who people want to work for or buy products from.”

In my previous entry I wrote “Is there a way in which both the benefits to shareholders and the benefits to the rest of the stakeholders can coexist? That is what CSR is all about; it calls for a win-win outcome.” There are some times when a corporation will donate money that will not produce a quantifiable economic return but they do it for the sake of reputation. For example, under natural disasters, companies will be very supportive, especially with their own employees. But most of the times, the company will indulge in sustainable actions because it produces a direct or indirect economic benefit.

O’Brien also makes the case that for sustainability to work it has to be ingrained in the strategy of the company or at least in most areas of the business. She gives the example of the Herman Miller where the CEO, Brian Walker, set two environmental goals by which his performance was measured. In the case of Herman Miller, sustainability is not about intentions but about actions, it was embedded in the culture and mission. I feel that it's the duty of every company to provide not only short-term results but a long-term sustainable future for the company and for the resources that it consumes out of this World.

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[1] http://business-ethics.com/2010/10/06/1736-sustainability-business-strategy-trumps-reputation/

TIME Wall Street ethics

The cover of TIME magazine in the February 13^th issue reads: “This man is busting Wall St.” The article tells the story of US attorney Preet Bharara. Preet puts law violators in Wall Street behind bars. Most of his focus has come from listening and recording conference calls where many times information is shared illegally between corporations, like hedge funds. This has led to the arrest of 63 people on insider-trading and other stock-fraud charges. It’s impressive that he has had 56 convictions, of which 7 are pending, and he has had no losses. One of his goals is to finish Wall Street’s culture of greed and allow equal competition.

The down side of the coin is that the notion of inside trading is not clear at all, “Neither the SEC nor Congress has ever defined inside information, nor has either succeeded in specifying the level of significance the information must have to be the subject of a criminal violation” said Henry G. Manne, a dean emeritus of the George Mason University School of Law. I wonder the impact that this has on privacy and condemning employees that are innocent. I’ve heard so far too many cases of governments sneaking into people’s lives and corporations’ affairs. Nowadays is not about violating the law but about avoiding any appearance of violation. A simple joke over the phone or in an airport can be considered as a threat if it’s wrongly interpreted. The article highlights the fear that many executives have to pick-up the phone knowing that someone might be listening. For people whose affairs are conducted honestly, it’s very uncomfortable and contra-productive. It limits freedom of expression.

But not all is negative. The outcome of Bharara’s investigations has had very positive results in Wall St. After all, the financial crisis of 2008-2009 was caused by the financial system along with some wrong decisions from the government itself. The article tells the story of Bharara accusing Dan DeVore, a former global supply manager of DELL who sold information on sales, forecasts and future pricing of DELL computers to Adondakis of Level Global for a sum of $145,000 paid by PGR. There are crimes that are more obvious than others but this one doesn’t require half of an eye to notice.

The work done by Bharara provides an external and strong incentive for Wall Street professionals to be ethical in their dealings. About my point made two paragraphs above, to detect violators in Wall Street has more weight than potential privacy issues. The things that happen in Wall St., as we learn from history, have an awfully big impact, for good or bad, in the whole World.

Government's Sentencing Guidelines

In the book “Managing Business Ethics” the authors mention the positive impact that the U.S. Sentencing Guidelines have had on the preventing unethical behavior. These guidelines sentence corporations more than individuals. A corporation can be severely punished even if only one employee breaks the law. Organizations are very concerned about offenses because this could mean closure of the company.

To provide an example of this impact, in Guatemala a new law was signed in 2009 called “Ley de Creación de Ambientes Libres de Humo de Tabaco” (Law for Creation of Smoke-free Environments). The law prevents people to smoke around non-smokers in closed environments. They do this in two ways:

1.       Penalize smokers that break the law

2.       Penalize institutions if smokers break the law in their premises

Of course, the second option was more feasible because it is easier to control and more effective because institutions have more power and resources to prevent these actions than does the government. The severe penalties made institutions openly and explicitly communicate against breaking this law and establish policies and monitoring. Before the law was signed, the rules in my University prohibited smoking on campus but nobody followed them. It wasn’t until after the law was signed that the University impeccably complied with its rules.

Disseminating ethics across countries

Today we had an in-class discussion on our responsibility to disseminate good ethical behaviors across countries and cultures. The point was made that it was not US responsibility to impose ethics on any country. It was argued that this was each country’s task and they made it sound as if ethical behavior in some countries was different from that in US, for example, to have meager working conditions in factories. While I agree that US should be careful in imposing politics, economy and culture in other countries, I believe that ethics is standard in the entire World because is not a mater of opinions but of human’s dignity.

We cannot assume that we can provide Chinese with bad working conditions just because they will not quit since they have financial needs. Chinese suffer from bad working conditions as well as an American would suffer, and that’s because we are all humans and want to be treated with respect and dignity.

I liked what Peter Xie (a Chinese MBA student) wrote in his journal: “I was later asked: What is the standard of “good” work environment for a Chinese worker? I guess the best answer will be that “How comfortable you feel about letting your son (brother, husband, etc.) working in that kind of environment?”  If we are happy about that kind of work environment, then I am sure that Chinese workers will be seven times more than happy about it.”

Internationals want to be ethical but sometimes external forces like corrupt governments and cultures make living good standards very difficult.

Corporate Social Responsibility

Today I was very intrigued about the idea of CSR (Corporate Social Responsibility). The needs of society and the needs of shareholders sometimes contradict each other. Usually, a responsibility towards society is seen by some managers as an economic burden with no financial return. For them, it’s a lose-win situation, them being the losers. On the other hand, a company might be tempted to do things that economically are sound but that deteriorate society or the environment. For example, manufacturing of certain products can cause serious environmental or health issues. In this case, society loses while shareholders win.

Is there a way in which both benefits to shareholders and benefits to the rest of the stakeholders can coexist? That is what CSR is all about; it calls for a win-win outcome. For example, managers can better make use of natural resources like water. If they become more efficient in water use the outcome is good for the company in terms of savings and great for the environment. Hotels do this when they ask you to “recycle” their towels. If you use the same towel during your whole stay then you will saved them and the environment some water. 

Companies also are very involved in humanitarian and social causes, like supporting campaigns against cancer, or giving money to fund orphanages. They will usually do things that can better the image of the company as well as provide additional sources of income. For example, Microsoft will give free computers equipped with Microsoft Office to school with limited resources, or Bayer (where I worked before) will fund a global campaign against Pulmonary Hypertension (blue lips) to increase awareness of the illness while improving their image and commitment to treating rare diseases. This will not only be good for society but in the future it can increase Microsoft and Bayer’s sales.

Ambition and the Soul

Nathan O. Hatch addressed BYU in March 27^th, 2001. He entitled his address “Ambition and the Soul”. You can listen to it for free at the link at the end of this reading.

“Does ambition constitute a virtue or a vice?” Nathan asks. The dictionary defines ambition as “A strong desire to do or to achieve something, typically requiring determination and hard work.” Under this definition, I am very ambitious. I strongly desire to have an eternal family and I am working hard for it. So ambition is not bad in all instances. In fact, I would say that it is ambition that keeps us alive, we all follow the earnest desire to achieve happiness. On the other hand, ambition can get us off track when motivated especially by our self-interest. Power, fame or wealth is usually motivated by the benefits it can bring to me at the expenses of what it would mean for others. Nathan counsels to “scrutinize professional ambition with respect to how it affects other dimensions of life”. How do the means and the ends of my ambition affect my family, my friend, those around me, my relationship with God? The answer to this question will clearly highlight potential pitfalls in our desires and actions.

Ambition can be a bad thing for two reasons:

1.       Success rarely satisfies ambition, once we have success we will fall into a perpetual cycle of wanting more.

2.       We can fall into thinking that our success depends on somebody else failing. This will put us in the wrong path of trying to trip others to reach our goals.

It is our duty to take a deep dive into our convictions and desires to keep ambition from taking us in wrong paths.

http://speeches.byu.edu/?act=viewitem&id=238&tid=10

The role of conscience in modern business

Robert C. Gay gave a great address at the Marriott School Convocation of April 26^th, 2002, entitled “Within and Beyond Ourselves: The role of conscience in modern business”. The talk can be found at the end of this reading.

Conscience has different names for different people. Some call it Spirit, some gut feeling, some moral sense, and others, inner voice or small voice. Regardless of the name, it is very hard to oversee the importance that conscience has in our ethical decisions. Conscience is tied to the concept of Virtue. When faced upon a choice, we should look at ourselves in the mirror and ask: “Would my parents or my wife be proud of the decision I will make?”, or “Would I feel comfortable if my decision appeared on the news?” When we answer these questions, often the decision just seems wrong. The feeling we get is hard to explain and many times it contradicts all previous analysis. If we ignore that feeling and pursue the opposite path we might find ourselves lamenting a future situation saying “I knew this would happen? Why didn’t I listen?”

Robert Gay warned us “…regardless of who we are or what we may believe, we will always be brought to crossroads. At these junctures, when the path is unsure, many will conscientiously ignore the call to faith and instead look only to their own wit, skill, and analysis to solve challenges. Because of this I look at each of you today with great concern.”

To end his address, Robert expressed his desire to follow the will of God in his decisions. Our duty is to examine every detail of the decision and then follow the Spirit into a solution that is in harmony with God’s will. There is happiness in having a clean conscience because the decisions we have made are right. “True success”, said LeGrand Richards “is to accomplish the purpose for which the Lord sent me upon the earth.”

http://emp.byui.edu/TAYLORJA/Robert%20C%20Gay%20speach.pdf

This is no harm

BYUEthics.org directed me to a talk by Marvin J. Ashton in May 1982 titled "This is no harm". The reading points out important aspects about ethics. The link to the talk is:

https://lds.org/ensign/1982/05/this-is-no-harm?cid=email-shared&lang=eng


Three teachings stood out to me:

1. "Avoid those that want immediate decisions or cash right now". Insurance companies, for example, will offer you an amount of money immediately after a car accident if you sign an agreement right away. They know that if you sign now, you will not be able to ask more money later, even if you find out that you deserved or needed more. Unethical people will have you act on impulsive behavior now instead of rational choices later, after you have put some thought. We need to make sure we understand the situation and its implications before we make a choice. Take your time.
2. There is no gray area between right and wrong, Elder Ashton says. This being said, some of the hardest decisions are not between right and wrong but between right and right. For example, in a company, employees might be required to make decisions that benefit stockholders but damage the community, or benefit the community but damage stockholders. This is why finding alternatives where both parties can be satisfied is key. We need not rely solely on our knowledge and reasoning.  Elder Ashton mentions that if you cannot reach a conclusion on your own then "advice should be sought from knowledgeable and trusted counselors". It might be a father, a Bishop, or any person that we consider reputable.
3. The final takeaway is that people lie to avoid personal embarrassment. In other words, we lie because we lack courage. And I totally agree. In fact, I think that we lack courage because of the opportunity cost of telling the truth. Sometimes, by acting with courage we will lose a friendship, a job, or a business deal.

Justice ends where family begins... a real life ethical dilemma

One late afternoon, in 2009, Abel was ready to make a tough decision between his responsibility towards his family and his responsibility towards his country, his employees and his beliefs.

A few years before, he had entrusted his company to Silvia, a very likeable woman, with vast experience in the industry. She over-performed during her first year as a general manager, significantly improving revenues and customer service. Abel had Silvia run the whole company because he trusted her. But Silvia’s second year in charge changed Abel’s perspective. Sales declined month after month. During meetings, Silvia would blame the decline on the global financial crisis of 2008. Things started getting odd from then on. First, Silvia gave up part of her salary to help the business during months with little income. Second, she brought in a family member to replace a current employee. Third, Abel received a call from a client trying to reach Silvia. The company provided services to this client during the week but Silvia had failed to report the income. Through an audit Abel found that there were major discrepancies between the reports, the money in the bank and cash collections. Abel warned Silvia to fix the problem immediately if she wanted to keep her job.

Silvia was given another opportunity during November and December but these months finished up having terrible revenues, plus, Silvia laid-off an employee without Abel’s consent. This employee reported some of Silvia’s unethical behavior. First, she didn’t report sales in order to steal the money. Second, she started her own rival company with the stolen money. Third, she grew her company by using Abel’s company resources and stealing clients. The news was devastating. Without further consideration, he fired Silvia along with her relative.

The company would now go bankrupt, leaving more than a couple of families jobless, including Abel’s, unless Silvia agreed to give the money back, close her business and apologize to Abel’s customers. Of course, she declined and Abel told her that he would start a lawsuit.

After a few days, Abel received calls from an anonymous person who life threatened his life and his family’s. This person was very well aware of Abel’s life and businesses. Abel knew, without a doubt, that Silvia had hired this person to make the call as a scare tactic to prevent him from suing her. These situations were very common in the country. 95% of the time, the threats would not materialize. On the other hand, the other 5% could put Abel and his family at risk. The only way to stop the threats was to not go through with the lawsuit. But Abel had always considered people “cowards” when they failed to testify against the crimes they had seen. This, he believed, contributed to the fact that murderers, kidnappers, drug dealers, violators and thieves could walk down the streets with no resistance and justice. This was his chance to stand up for his convictions. Plus, if the theft was reported, Abel was not required to pay a termination package to Silvia, thus recovering some of the money stolen.

Should Abel proceed with the lawsuit?

Business Ethics definition and bad apples

Linda Treviño and Katherine Nelson, authors of “Managing Business Ethics”, define ethical behavior in business as the “behavior that is consistent with the principles, norms, and standards of business practice that have been agreed upon by society”. I find this definition to be correct but incomplete. I would add that the behavior needs to be consistent also with gospel principles for the following reason. In the Book of Mormon, King Mosiah taught that “it is not common that the voice of the people desireth anything contrary to that which is right; but it is common for the lesser part of the people to desire that which is not right.” What happens when the contrary happens and it’s the lesser part only that desires that which is right? Then the definition above will create a dangerous view on ethical behavior. Only an alignment with gospel principles can maintain the purity of ethical standards.

The authors also make a good case in chapter 1. They present the idea that ethical problems are not always caused by bad apples in the organization but also by bad barrels, things inside the organization that are causing the apples to spoil. I quote from the book: “work environments that either encourage unethical behavior or merely allow it to occur”. This reminds me of a situation I faced in my own business. The manager was a very trusted employee; I had worked with her for a long time, before she even came to work for me. Things started very well at first but worsened over time as I became less involved in the business because of other life projects. Numbers reported by the manager seemed wrong, and the business declined month after month. I remember that one December, our biggest selling month, revenue was awful and cash in the bank didn’t match the money recollected. I instantly detected that she was stealing and lying.

After this event, I spoke to my father and he said: “Employees will always steal but your job is to reduce that to a minimum”. Of course this is not true for every employee but the principle applied in my situation. The environment that I provided had rotten an apple. I stopped, overtime, many of the financial controls and procedures that would have allowed me to identify the problem in a very early stage. Instead, I lost a very good employee and manager, someone with great potential. My father also mentioned: “If you put cash in front of an employee, even the most ethical person will be tempted to take it. The key is to remove the temptation”. Temptations can make even the greatest to fall, like King David. He was characterized by his unfailing courage, faith and integrity but he couldn’t stand the temptation of see Bathsheba bathe.

The work environment, as the authors mention, has to be such as to discourage unethical behavior and prevent it to occur. Blame cannot be attributed solely to employees.

Pondering on an ethical dilemma

Walking back home today, I did some thinking about an Ethics assignment coming up: to write an ethical dilemma that I have faced in business. I came up to some conclusions about Ethics that I tied to Gospel principles.


The first conclusion is that as well as there are sins of omission and of commission there are also ethical violations of omission and of commission. Ethical commission violations arise when we dilute others into thinking that evil is good, when we cover up a problem from the eye of our manager, or when we wrongly diminish someone to make us look better. But omission violations can be sometimes more subtle and easy to forget or overpass, perhaps because commission requires you to do something while omission simply requires you to do nothing. For example, when we talk about stealing the first thing we think of is a burglar taking away someone else’s belongings instead of thinking of the money we might owe someone and if we don’t pay back we are also stealing. Simply put, I can remember more clearly things I’ve done than things that I’ve left undone.


The second conclusion is that of ethical transgression. As well as Adam transgressed a law to satisfy another, I ask myself if there might be occasions in which one has to break an ethical law to preserve a higher one. This taught came to me from an ethical dilemma in my life. In this dilemma, I did not denounce a previous employee to the authorities in order to preserve the physical integrity of my family and my own. Did I do wrong in not denouncing the person? I don’t have an answer, but I do prefer to see my family alive than to take someone to court. I let go of an ethical obligation for a higher obligation towards my family.


The latter thought brings me to my last conclusion. One might break an ethical “law” for many causes, because of ignorance, for personal gain, for vengeance, among others. However, I consider that the biggest reason why a commonly ethical person might violate its beliefs is because of intense pressure. He has neither the desire nor the ignorance but the pressure is so big that he finally yields in. This can easily be seen in the case Riding a Fine Line that I saw in class. It talks about a train out of control that is heading towards a family having a picnic on abandoned train tracks. You can see them from afar but there is nothing you can do to save them except to pull a lever that will divert the train to another path that will only kill a lonely fisherman who is fishing while seated on the tracks. There is nothing you can do to warn the lonely man or to save him once you pull the lever. The answer here is to follow the deontology ideology instead of utilitarianism, in other words, follow the ethical law of not being responsible of killing someone instead of thinking what the final outcome will be, for example, save the family since they have children and they are not lonely. My point comes across when we do a little adjustment to the case. What if that family having the picnic is your own family and you are the one with the hand on the lever? I don’t know about the rest, but for myself that is way too much pressure to handle. I wonder in that case, how many would not pull it.