If companies want to be good, they should be prepared to throw away the rule book and adopt practical wisdom, advises philosopher Julian Baggini

The other day, I had a small consumer experience that encapsulated a widespread problem in business ethics. I stopped at a motorway service station to get a coffee from a franchise that, along with almost all others, has recently been making positive noises about reducing waste. But when I ordered my cortado to drink in, the barista reached for a paper cup. Only when I asked did he change to a glass one.

I drove over 400 miles that day and the same thing happened three times. In the standard lexicon, this is a failure of “joined-up” thinking. But people have been talking about the need to join-up ever since I worked at a public sector think tank in the 1990s and still it rarely seems to happen. Why?

One important and under-appreciated part of the answer can be gleaned from an ancient source: the virtue ethics of Aristotle. Aristotle believed that doing the right thing is not primarily about following principles. It is rather about becoming a person of good character. When we develop the habits of acting well, doing the right thing becomes not quite automatic, but natural.

Starbucks came a cropper when staff in Philadelphia took a rule-based approach (Credit: Grand Warszawski/Shutterstock)

Interestingly, 5,000 miles away at around the same time, Confucius came to pretty much the same conclusion. Rules are for people who can’t be trusted to do the right thing; those who can don’t need them. This idea also occurs in Buddhism. “Those who don’t steal don’t need precepts against theft,” said the Zen master Bankei Yōtaku. “Precepts against lying are wasted on a truthful man.”

All these moral traditions were talking about individual virtue, but the same basic idea applies to corporate entities. Organizations also have characters, more commonly called “cultures”. For example, former Goldman Sachs employee Greg Smith says that the company used to have a culture that “revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients”. He described this as “the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years.” Smith left the company because he thought this culture had been lost along with its “moral fibre”. Instead, Smith felt, it had become too focused simply on maximizing returns.

Coffee cups are an example of companies rigidly following policies but losing sight of the principle

Clearly, if an organization loses its moral compass it is not going to perform ethically. But it is also in trouble if it relies on the wrong kind of moral compass. Unfortunately, that is precisely what too many do. Because we live in a culture of measurement, audit and metrics, ethics gets squeezed into these templates. Principles are turned into policies but then the policies drive action, not the principles.

Coffee cups are just one example. The sincere desire to reduce waste produces a policy of rewarding those who bring their own reusable cups and internal initiatives to find more easily recyclable single-use cups. But this doesn’t change the culture, so in practice staff continue to do things that maximize rather than reduce waste. The company rigidly follows its policies but loses sight of the principle behind it.

Dao principles of harmony should apply to business. (Credit: Marina Keremkhanova/Shutterstock)

It would be naive to think that large organizations can, or should, do away with policies and metrics altogether. But they should be seen as complements to, rather than replacements for, the greater task of building the right kind of moral character in the organization.

The goal is to ensure that everyone understands and is committed to the same set of ethical principles. In a truly ethical organization, this means that everyone is committed to doing the right thing, whether or not senior management has flagged up something as a specific concern.

The problem with a rule-book based approach is that is actively undermines practical wisdom

How do organizations build this kind of character? The starting point must be leading by example. Everyone has to see that the behaviour of senior management is motivated by more than just financial profit; that colleagues, suppliers, and customers are treated with respect; that people who raise ethical concerns are listened to and rewarded, not silenced.

More important is that everyone is encouraged to develop what Aristotle called “practical wisdom” (phronēsis). Virtue ethics maintains that no set of rules can cover all eventualities and so to do the right thing you have to develop good moral judgment, a capacity to notice when things are not right and to change things accordingly.

The problem with a rule-book based approach is that it actively undermines practical wisdom. When people become used to complying with policies, they stop thinking for themselves. This is probably in part behind the terrible incident at a Starbucks in Philadelphia when a manager called the police to remove two black men.

Timpson's 'upside down management' empowers staff. (Credit: Jevanto Productions/Shutterstock)

Racism was clearly a factor, but the incident began when the manager refused to allow one of the men to use the restroom, in accordance with company policy that they were for customers only. Had the manager followed the principle of hospitality, which should be at the heart of the coffee chain’s ethos, rather than one of its policies, the situation would probably not have escalated.

One company that seems to have understood the need to build character is the UK key-cutting and shoe-repair chain Timpson. Under founder John Timpson’s principle of “upside down management”, all staff are authorized to do whatever they judge is necessary to give the customer the best experience. This empowers everyone in the organization to think about how to do the right thing on a daily basis and never hide behind the policy book.

The company does have some specific policies, too, but these reinforce rather than replace the emphasis on principle. For example, where they offer dry cleaning, someone who is unemployed can have clothes for a job interview cleaned for free.

CSR advisors have to be willing to make their clients feel uncomfortable, to speak truth to power

The organic skin care and cleansing company Dr Bronner’s is another organization that puts its moral principles at the heart of its practice. It’s six “cosmic principles” are: work hard and grow; do right by customers; treat employees like family; be fair to suppliers; treat the Earth like home; and fund and fight for what's right.

These might appear high-minded, but notice that the very first is a commitment to performing well as a business. What Dr Bronner’s gets right is that it sees how the ethical dimension has to be fully integrated to the business – it is not an add-on. As the Daoist Zhuangzi said, “virtue is the cultivation of complete harmony”.

No company is ever completely virtuous, just as no person ever is. That is one reason why the commitment to building corporate character has to be constantly worked on. CSR professionals have an important role to play in this. There is always a danger that they end up making their clients feel comfortable, to reassure than that by adopting this framework, these principles or that reporting system, they can become truly good.

But the genuinely good never believe they have become completely good. The best CSR advisors, therefore, have to be people who are empowered and willing to make their clients feel uncomfortable, to speak truth to power, trusted that their admonishments, as well as their encouragements, are confidential, tough words offered to a friend. Building moral character is not easy: bewarbeware of anyone who offers a painless way to virtue.



Dr Julian Baggini (microphilosophy.net) is a philosopher, writer and consultant. His most recent book is A Short History of Truth (Quercus)

Main picture credit:  (Credit: thelefty/Shutterstock)


CSR  business ethics  Aristotle  Confuscious  Timpson's  Starbuck's 

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