A brief history of the morality of organisations

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Learning objectives: …

Learning objectives:
- Pinpoint landmark moments and events in the history of anti-morality and CSR, including necessary future directions to improve business virtue
- Introduce globalisation and sustainability as two main drivers for morality in modern business
- Indicate some reasons for the lack of certainty around the business case for CSR, and slow growth in responsible business

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  • 1. A BRIEF HISTORY OF THE MORALITY OF ORGANISATIONSSaturday, 05 1 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 2. › Pinpoint landmark moments and events in the history of anti-morality and CSR, including necessary future directions to improve business virtue › Introduce globalisation and sustainability as two main drivers for morality in modern business › Indicate some reasons for the lack of certainty around the business case for CSR, and slow growth in responsible business LEARNING OBJECTIVESSaturday, 05 2 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 3. Value neutrality is a historic concept relevant to organisations and ethics› i.e. the separation of organisational objectives and moral responsibility› Its origins were the institutionalisation of science: 17th century Royal Society of London and Charles II agree that science and the state mind each other’s business. 1911 Frederick Taylor’s Scientific Management, where “the system comes first, not the man, and the system shall be based on science”.Saturday, 05 3 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman. Images from abc.net.au and wikipedia.org
  • 4. While it sounds unethical, it was morally justified by economics› Economists believed that moral responsibility Oh! So it must be OK… right? comes from the individual pursuit of self interest (Adam Smith, 18th century)› “It is the extent of the market that limits moral responsibility”: i.e. the limits to organisational responsibility lie within a restricted area of interest. › Mainstream interest (traditional view) : ROI, $ › Broader interest (that needs to be explored): stakeholders, environment, future generations (and ROI, $)Saturday, 05 4 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman. Image from borders.com.au
  • 5. Business adopted it and it became a key foundation for success› Corporations and Henry Ford business schools One of the world’s best measure and emphasise performing businessmen economic/financial of all time. performance criteria. He strictly separated business from personal/human values. He focused 100% on ROI. (Return on But does this investment) make sense VALUE socially? NEUTRALITYSaturday, 05 5 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman. Image from wikipedia.org
  • 6. And now pervades the manner in which all organisations are managed› Think about your job at work and how your boss decides evaluates you? › The vast majority of evaluations are measurable and objective.› The more of a measurable you deliver given the same amount of time and resource is efficiency. › This can devalue human life and experience. › By nature, it ignores and suppresses that which cannot be described. These things are quite far from morals and ethics…Saturday, 05 6 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 7. As a result, it generated an anti- morality business sentiment› Friedman, 1962: › The role of business is to “increase profits as long as it stays within the rules of the game”.› “The Dangers of Social Responsibility”, Levitt, 1958: › Business has a better chance of survival if long-term profit maximisation is the dominant objective › Government should take care of general welfare because CSR is limited. Is this a socially responsible anti business morality statement?Saturday, 05 7 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman. Image from amywalters.wordpress.com
  • 8. And a solid case against corporate social responsibility› It undermines the operation of a free society and a market system.› Business involvement in government centralises control and takes us on the path of socialism.› How can business know about the social issues to pursue?› It is wrong that shareholders cannot choose where their money goes.› The price mechanism, not politicians, should allocate competing resources.Saturday, 05 8 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 9. Was anti-moral, profit-maximising behaviour seen as ethical? Anti-morality business sentiment Business focus REALLY??? on ROI and $ Economics: “self- interest is moral” MORAL IMMORAL Value neutralitySaturday, 05 9 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 10. Business was in denial, it was absolutely not moral or ethical Henry Ford receives the Grand Cross of the German Eagle* from Adolf Hitler’s Third Reich on his 75th birthday in 1938. * An award given to foreigners who were supportive of NazismSaturday, 05 10 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman. Image from orange-papers.org
  • 11. Example: World War 2 and the Nazi concentration camps› Ford and General Motors used forced labour camps in their operations Gave substantial support, claimed no influence over its operations Chairman Alfred P. Sloan defended the operation as “highly profitable” › THEIR JUSTIFICATION: Value neutrality & efficiency! Efficiency… if you are too sick to work you should die…Saturday, 05 11 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 12. The real trend was persistent immorality MORAL IMMORAL Economics: “self- interest is moral” Anti-morality Value business sentiment neutrality Business focus on ROI and $Saturday, 05 12 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 13. Recently, it became accepted that their views are no longer accurate› Nowadays it is more or less consensus that they pushed too far with their views. There is more balance now. › Friedman assumes certain things that are impossible in today’s society, e.g. unions representing their employees and economic privatisation and deregulation. › The world has learned some lessons from its history › Business started to care › The conditions of the market changedSaturday, 05 13 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 14. One of the major drivers and changes to the market, is globalisationCultural: gender, ethnic Legal: treaties, whichequality, bribery, etc country’s laws to adopt Important, inev itable moral considerations:Accountability: who arethey accountable to? Scale of impact Moral and ethical diversity Saturday, 05 14 of 27 November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 15. A global playground with no rules or controlsNegative consequences: Who is controlling the actions of› Unsustainable natural global business? resource use Where are the laws?› Sweatshops Where are the “rules of the› High cost agriculture game”? products Current solutions:› Unstable economic growth Civil society› Unequal rates of › Self regulation The Internet development › Pressure› Issues with immigration Are these really and cultural identity good enough?Saturday, 05 15 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 16. Another driver is the increasing popularity of sustainability › Brundtland’s Sustainable Development › The idea to introduce sustainability as the new universal ethical consideration into the behaviours and decisions of corporations and individuals. › Triple Bottom Line: Social, Environmental, EconomicSaturday, 05 16 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 17. Anti-morality sentiment lost favour as CSR strategies emerged in the US MORAL IMMORAL USA in the 1960-70’s: › Corporate philanthropy Anti-morality › Voluntary codes of conduct business › Corporate lobbying sentiment › Social investment funds › Social audits › CSR rankingsSaturday, 05 17 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 18. Despite a dip in the 1980’s, it seems to be popular again MORAL USA in 1990’s IMMORAL the 1960- and 70’s today Anti-morality business sentiment 1980’s, the “decade of greed” › Thatcherite economics › ReaganomicsSaturday, 05 18 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 19. Truth be told: business slowly started caring about its impact on the world It’s interesting how morality was not strategic at first…› Corporate philanthropy: › Started from a general concern for employee education and health (a productive workforce is a happy one) › Became strategic with cause-related marketing› Social investment: › Initially about clearing its conscious › Became strategic: NGOs in related industriesSaturday, 05 19 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 20. Morality is seen as important, but extremely difficult to implement› Moral responsibility is gaining popularity and momentum› BUT it’s not easy, it’s complex! Compare an individual decision to a corporate one: Individual decision: Corporate decision: › Only consult with your › Consult with 15-1,500 own mind, values, people each with their perspectives, etc. own minds, etc, PLUS › Don’t need to CULTURES! › POLICIES communicate rationale › Must be transparent and › CODE OF › Fewer stakeholders widely communicated ETHICS › MANY stakeholders › LAWSSaturday, 05 20 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 21. Leaving most organisations reliant on the law (a poor substitute) › Umm… Law is a codification of ethics into a › It does not clearly determinesocietal structure. right from wrong (even judgesCan organisations have to interpret the law). just use these? › Law evolves over time, and very slowly too. › Different across borders Saturday, 05 21 of 27 November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 22. The business case for morality also slowly began to develop› There are volumes upon volumes of academic and consultant studies showcasing the links between CSR strategy and profit› There are tens of thousands of case studies and press releases saying the same thing.Saturday, 05 22 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman. Image from yellowmagpie.com
  • 23. A case which is not yet closed – the literature is very disorganisedMargolis & Walsh – found that 95 selected studieson the CSR-profits relationship were completelyincomparable with each other.Griffen & Mahon – produced a journal in 1997called “The Corporate Social Performance andCorporate Financial Performance Debate: 25 Yearsof Incomparable Research”.Literature reviews – there were 12 major CSRliterature reviews between 1979 and 1999, with 50shortcomings in the broader body of research…Saturday, 05 23 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman. Image from sciencephoto.com
  • 24. And often exaggerates CSR as a silver bullet› CSR’s benefits have been blown out of proportion: it is one dimension of corporate strategy › If it were a silver bullet to competitive advantage, organisations would remain secretive about it. On the contrary, they seem desperate to promote their CSR activities!› At the very least, good social performance does not lead to poor financial performanceSaturday, 05 24 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 25. So until the business case becomes clear, business virtue will be low› As much as I hate it, it’s true: it does not provide ROI for everyone. There are many business cases for But there are many ethical and more business responsible cases for unethical management and irresponsible managementSaturday, 05 25 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.
  • 26. “Were Milton Friedman now to revisit this subject, he would find much less to concern him. Virtually all contemporary writing on CSR emphasises its links to corporate profitability”. - David Vogel’s The Market for Virtue Pursue profits Follow the rules of the gameSaturday, 05 26 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman. Image from yellowmagpie.com
  • 27. Unit 1 Course Material, Managing Social and Environmental Responsibility, 2011, SOAS CEDEP Vogel, 2005, The Market for Virtue Betton & Hench, 2002, Any colour as long as its black: Henry Ford and the ethics of business Friedman, 1962, Capitalism and freedom Levitt, 1958, The dangers of social responsibility REFERENCESSaturday, 05 27 of 27November 2011 Inspired by SOAS CeDEP study programmes. Presentation © 2011 by Darren Willman.