Chris MacDonald's Open Salon Blog

Bye Bye Open Salon

Wed, 4 May 2011 09:05:21 -0400

Just a short note to mention that I'm leaving Open Salon (or rather that no new postings will appear here).

I'm now blogging (professionally) for Canadian Business magazine, at http://www.canadianbusiness.com , and my exclusive deal with them means cutting off the feed to OS.

You can also continue to find my blog at its other "usual" address, http://www.businessethicsblog.com

Buffett, Sokol, and Virtue Ethics

Tue, 3 May 2011 09:05:50 -0400

Warren Buffett (photo by Mark Hirschey)

What kind of person do you want to be? What kind of businesspeople do you think worthy of imitation?

The world’s most successful investor, Warren Buffett, was recently caught up in a scandal. He himself is not accused of any wrongdoing, though some have accused him of responding to the scandal — one involving a senior employee of his, one David Sokol — in a lackadaisical manner.

For the basics of the story, see here:
Berkshire doesn’t plan big changes after scandal (by Josh Funk, for the AP)

Berkshire Hathaway CEO Warren Buffett says he doesn’t think his reputation has been hurt much by a former top executive’s questionable investment in Lubrizol shortly before Berkshire announced plans to buy the chemical company….

Sokol is accused of a form of insider trading, essentially a kind of betrayal that is unethical at best, and illegal at worst. Now, Sokol himself is, not surprisingly, keeping pretty quiet, and speaking only through his lawyer. I’m more interested, at this point, in Buffett’s response, and what it says about his character. I’m not the first person to suggest that you can learn a lot about a person by the way he or she responds to a crisis. But when the man in the spotlight happens to be one of the world’s most successful businessmen, there’s some reason to think that the lessons learned might just be more interesting than most.

For more about Buffett’s response, see here: Buffett Takes Sharper Tone in Sokol Affair (by Michael J. De La Merced, for the NYT.)

Despite the critics, I think Buffett comes out of this looking pretty good. To begin, Buffett gets points for demonstrating his loyalty to a long-serving employee:

[Buffett] was harsh in his assessment of Mr. Sokol’s trading actions, he pointedly declined to personally attack Mr. Sokol, instead highlighting the executive’s years of service and good performance.

Buffett also has a sense of context and proportion. Not that the wrong of which Sokol is accused is small. But it is wise, and ethically correct I think, for Buffett to resist the urge to pounce on an employee who has, in Buffett’s own experience (up until the present crisis), been a diligent and morally-upstanding employee:

“What I think bothers some people is that there wasn’t some big sense of outrage” in the news release, Mr. Buffett said. “I plead guilty to that. But this fellow had done a lot of good.”

Buffett’s business partner, Charles Munger, likewise gets points for showing restraint:

“I feel like you don’t want to make important decisions in anger,” Mr. Munger said, defending Berkshire’s press release. “You can always tell a man to go to hell tomorrow.”

All of this is set against a background of Buffett insisting on the importance of having a reputation for integrity in business. Buffett is no slacker when it comes to ethical standards. The NYT piece quotes Buffett from 20 years ago, on the topic of the significance of reputation in business:

“Lose money for the firm, and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless.”

Finally, it’s worth pointing out that this focus on Buffett’s character, and on the example he sets, represents an importantly different approach to business ethics. The approach here is akin to what philosophers call “virtue ethics,” a stream of thought that goes back to Aristotle. The idea here is that, rather than focusing on principles (or, more cautiously, in addition to focusing on principles), what we really ought to do when thinking about ethics is to focus on character. Rather than asking, “what rules apply to this situation?” this way of thinking asks, “what would a good person do in a situation like this?” And in between crisis points, we should be asking, “when a crisis comes, what kind of person do I want to pattern my behaviour after?” I don’t know nearly enough about Mr Buffett to hold him up as a moral exemplar, but I think that the kind of character he has displayed in the Sokol affair is worthy of emulation.

Laptop Thefts: Starbucks Scandal?

Mon, 2 May 2011 08:05:42 -0400

Just whose fault is it if your laptop gets stolen at Starbucks? Do coffee shops (and other similar businesses) have a responsibility to help curb such crimes? If so, how far does that responsibility go?

To kick the topic off, here’s a story by Michael Wilson, for the NY Times: As the Careless Order a Latte, Thieves Grab Something to Go

Starbucks shops are ubiquitous in New York, a respite for tourists and professionals young and old, and while the city’s criminal trends come and go and ebb and flow, there remains a steady march of handbags from those shops in someone else’s hands….

Apparently, Starbucks’ customers are pretty common targets. Starbucks, Wilson notes, pop up “again and again on police blotters.” That makes the iconic coffee chain sound like a pretty dangerous hangout. But Wilson rightly acknowledges that the rate of thefts at Starbucks (of which there are 298 in New York alone) needs to be put into context, and compared to the rate of thefts at other establishments:

Not to pick on the chain, based in Seattle. No one has tallied the number of Starbucks thefts, and purses and bags walk out of any number of restaurants and bars day and night. Grand larcenies — the theft of anything over $1,000, which is almost every purse with a credit card inside — remain the Police Department’s most vexing crime, as preventable as it is commonplace.

The focus on how common such crimes are in all kinds of public and semi-public spaces is right on target. To me, this is all reminiscent of the part in the movie, “Wal-mart: The High Cost of Low Price,” in which the film-makers — incredibly — blame Walmart for thefts, rapes, and murders that happen in the retailer’s parking lots. It’s a crazy accusation, of course: Walmart has nearly 9000 locations. If you looked at the stats for any 9000 parking lots, I’m willing to bet you’d find a fair bit of crime.

But back to coffee shops, and the rate of laptop and purse theft on their premises. What are companies like Starbucks to do in light of this? Clearly it’s not their fault that people are leaving their laptops unattended — I guess except to the extent that they’ve carefully engineered a warm and welcoming environment, one pretty much designed to encourage people to let their guard down. What might the company do, in principle, to reduce the amount of theft on their premises? Vigilant security guards would be one possibility, though that would surely do something to detract from the Starbucks ambiance. Security cameras are another, less intrusive, option. (But then there might be privacy concerns related to constant surveillance: do you really want the Starbucks-Cam watching over your shoulder while you read The Onion?) They could also install laptop locks on the tables in their shops (since most laptops have a universal lock slot). A different tack would be to eliminate free Wi-Fi, which would give people less reason to bring their laptops to Starbucks in the first place. Of course, lots of us like the free Wi-Fi, but if it’s encouraging us to engage in risky behaviours, I can at least see an argument for hitting the ‘off’ switch.

Warning signs are another option: signs could remind unwary customers of the dangers, and recommend that they carry their laptops with them at all times when on the premises. Apparently, one police commander thought that was a good idea:

[The officer] asked one branch to put up a sign warning customers; the manager demurred, saying such a sign required corporate approval.

But what is Starbucks (or any other coffee shop) obligated to do to reduce crime? Or at least, what would it be ethically-very-good of them to do? I don’t see a clear answer, though it’s easy enough to argue that they ought, at least, to grab some of the ‘low-hanging fruit.’ If there are simple and cheap things they can do to make customers safer, those things could arguably be considered obligatory, and besides, such moves might even attract customers, giving them a genuine sense of security, rather than a false one. But laptop theft at Starbucks will never, never be zero, and it’s unreasonable to think that the company has an obligation to drive the on-site crime rate anywhere near that.

Should We Teach Students About the “Social Impact” of Business?

Fri, 29 Apr 2011 11:04:35 -0400

As regular readers know, I’ve blogged a lot about the vocabulary we use to talk about ‘doing the right thing’ in business. Here’s another example of a term that some people seem to want to use to capture that entire topic: “Social Impact.”

See for example this piece, by NYU’s Paul Light, in the Washington Post: It’s time to require students to do good.

I’ll start by pointing out that the headline is inaccurate, though that’s likely not Light’s fault. (It’s more likely the fault of the newspaper’s headline writer. Hard to say.) At any rate, Light’s article isn’t about making students “do good;” it’s about teaching them courses about doing good. And that’s a very different thing.

Light points out that many business schools now offer courses on what he refers to broadly as the “social impact” of business. “Social impact,” he says, can variously be defined in terms of “social responsibility, innovation, engaged citizenship or plain old public service.” (Note that Light is in trouble here, already, implicitly assuming all of those terms are good things. For counter-examples, see my recent blog entry on unethical innovation.)

Anyway, Light says business schools are increasingly realizing that they need to teach students something about the social impact of business (and presumably, more specifically, about how to maximize positive social impact and minimize negative social impact.)

For what it’s worth, I should point out that many business ethics classes — presumably among the courses that Light sees as part of the trend — absolutely would not focus primarily on social impact. And that’s a good thing, because social impact is just one of the many ethical issues that arise in business. Courses on business ethics can cover a large range of issues, many of them not directly related to social impact:

product safety (which is mostly a concern to customers, who very often make up only a tiny segment of “society”)
employee health and safety
truth in advertising
the environment (which, depending on your philosophical views, may have ethical importance independent of society’s reliance on it).

Each of those topics has relatively little to do with social impact, and indeed there can be important tensions between, for example, what is good for employees and what is good for society.

But maybe Light doesn’t want courses in business ethics more generally; maybe he really does think it most important to focus on social impact, thereby ignoring the issues (like those noted above) that got the field of business ethics off the ground in the first place. Such a focus by business schools would be incredibly unfortunate, because it would leave business students radically unprepared to face the ethical challenges that they really will have to face on a daily basis in their professional lives. And even if courses on “social impact” do tackle a broader range of issues (including the ones listed above) the title of the course is going to mislead students into thinking that social impact really is the key issue after all.

Finally, I’m confused by the fact that Light views “social impact” as a skill:

Making social impact part of every student’s curriculum would send the signal that social impact is an essential skill….

What are we to make of this? Is social impact really a “skill”? Personally, I’m not sure how to make sense of that turn of phrase. I suppose we can read Light somewhat more charitably as meaning that an appreciation of the social impact of business, and an understanding of the key issues and how to respond to them, are essential parts of a sound business education. And surely he’s right. But we ought at least be clear on the fact that what we’re struggling with — and what we need students to struggle with — is the complexity of the role and impact of business in society. Calling it a skill misleadingly implies that we know what to do about it all, and now we just need to do it. If only life were so simple.

Lying for Profit

Wed, 27 Apr 2011 16:04:55 -0400

Lying, generally, is wrong. Is it also wrong to facilitate a lie, or to profit from doing so? What if your entire business model involves helping people tell lies? No, I’m not talking about the big accounting firms, who only sometimes help clients lie, and typically do so through creative interpretations of accounting standards. I’m talking about something much less creative, namely bald-faced lies. And yes, there are businesses that are set up to help you do just that — everything from helping you fake your resumé to helping you establish an alibi (if, e.g., you played hooky from work, or need to spend some quality time with your mistress).

Here’s the story, by Marissa Conrad for Time Out Chicago: Businesses that lie — and are proud of it.

Now, this is not the sort of story that I would normally bother with. After all, you don’t need a Ph.D. in philosophy or an advanced knowledge of the history of moral theory to sort through the ‘subtleties’ here. Yes, there are grey zones in ethics. And sure, lying is sometimes justifiable. But the exceptions prove the rule: deception is generally wrong. And deception of the kind that these companies facilitate is no exception.

But what’s interesting about these services, and what makes this story worth even mentioning, is the self-serving rationalizations that the proprietors of these services indulge in, in order to justify their existence. “Is lying on your CV justified?” they ask rhetorically. What if you really need the job? What if you’re a really decent guy who has caught some tough breaks in the past, and your CV needs a little boosting as a result? Who is to say? Well, the owner of one of these businesses is clear about his approach to the question:

“We believe that everyone deserves a second chance,” says [Reference Store] operations manager David Everett. “Is Robin Hood a criminal? It depends on who you ask.”

Now, presumably such companies render assistance to trivially few customers with Robin Hood’s claim to serve the greater good. And besides, Robin Hood-type characters achieve true hero status only in retrospect. We can’t conclude that Robin Hood’s actions were justified just because he himself thought they were. Likewise, the fact that lying is sometimes justified doesn’t mean we can afford generally to be agnostic about the ethics of particular acts of deception, let alone decide to facilitate such acts. The problem here really lies in the fact that these companies are unilaterally appropriating for themselves the right to make that determination, taking shelter in extraordinarily shallow self-serving rationalization, and abdicating their clear responsibilities to engage in at least a modicum of ethical reasoning.