How To Point Your Company's Moral Compass Towards Justice
Chris Houstonon 07 September, 2016 at 10:09
“We need to reduce the amount of justice around here. In fact, we’re asking each and every one of you to do your part to make this company less just by the day. That’s why we’ve titled this application of the strategy ‘Less Justice!’”
That wasn’t exactly what the CFO said, nor did it resemble her comments about the troubling matter whatsoever, but it is certainly what the assembled group of senior executives heard. The message was to stick with a carefully constructed strategy, but it might as well have been to enact “Less Justice!”—even though the publicly traded company had never declared its strategy as such. The choices its owners were making, however, seemed tantamount to such a declaration. How could a seemingly simple business conversation about customer benefits be a veiled moral argument about injustice?
In our ongoing series on the four cardinal virtues (prudence, justice, courage [or fortitude] and temperance), we’ve come to the second – justice. As with each of the cardinal virtues, there is no standing still, no neutrality. There is only moving toward or away from justice. If all our companies are not becoming more just, then they are becoming less so, and therefore less human.
Philosophers have taught us that to embrace justice is to, “give the other their due,” of which three critical elements are evident. To “give,” not because it is legislated, but to freely give or yield by one’s own choice. Secondly, “the other,” referring not to the corporation, but to someone else, some person or people outside the organization. And thirdly, “their due,” as in that to which they are entitled or that which affirms their inherent dignity as a person.
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She is only ten months old, with limited language skills, and sitting third in the birth order, but despite the vastly superior life experiences of her older siblings, she plays the justice card brilliantly. Her world is at her feet. She bends seasoned adults to her will. She is my youngest granddaughter, and like her peers in the not-yet-had-a-birthday age group, she understands justice in a profound way. Her sense of fair play is acutely attuned to any action that contravenes the duty of her parents and siblings to “give the other their due.” Her capacity to detect injustice and not only protest but deliver resolve-withering looks of disgust, which, quite frankly, work very well in her favor. Her wise parents, fortunately, sense the ever-present risks of a runaway train that carries the promotion of justice far across the line into self-indulgence, and so they have the risks of excess well in hand. Justice, it seems, is wired into us and our ability to detect its violation is much honed.
It is these same detectors that are lighting up for an executive client and friend these days. The maturation of the business model in which he serves as a leader has been advancing for a number of years. It is an example of the classic dilemma that my colleague Mike and I once called “The Poisoned Inheritance”, in which one generation of managers inherits high market share from previous leaders and are thus tempted to believe that it is their own recent actions which are producing the success they enjoy. Healthy, positive cash flows are habit forming in a business, for they deliver earnings and bonuses year after year. It’s a good life, when it happens, but no profit pool lasts forever, and business models mature, and inevitably it gets harder to reproduce past high performance. Unfortunately, by this time, owners have usually become used to the success (and the dividends) and therefore expect it to continue. The justice exam gets infinitely more difficult at precisely this point. Where will the margins come from (or in many cases, who will the margins come from) to make up for the lack of growth?
The migration away from justice usually begins innocently enough. A little value withheld from the customer here, a little extension of unpaid overtime there, a smidge here and a 1-degree course change there, never where it will be much more than an inconvenience. For instance, I remember when a customer arbitrarily extended their payables timetable from 30 days to 60 days, just because they could. Was it definitively wrong or illegal? No. Did the change cost me a bit? Yes. When we make those sorts of creeping “business” decisions, we always tell ourselves that it stops there. But with those new actions, we alter the moral compass of the business, even if ever so slightly. But, small course adjustments stack up over time. The intrepid explorer who aimed for the North Pole from the edge of the Arctic Circle will miss her destination by miles and miles if her compass was even 1-degree off when she began.
A business set out a few years ago to win some awards because they thought it would push them to do better work and be sound evidence of their prowess. At first, they were successful and their work improved. Soon, they needed a boost to keep up their winning ways, and little by little, some questionable practices crept in. More awards followed, and the practices were ratcheted up until it reached a point that their winning of the prestigious award lacked justice and was only successful manipulation. No one intended to end up in such a place, but while “justice might roll on like a river,” injustice creeps stealthily in like a snake.
“Chris,” I hear my friend asking me, “forget the fact that our business model is strained; when have we pushed it too far and taken too much from our customers, and when am I complicit in it all through actions we are taking that directly affect how well I am being paid?” My friend is reaching a point where his innate sense of justice is compromised and he must struggle with what to do next. He is not alone in this predicament; for there are countless strained business models and many more difficult choices that business presents each day. In the emerging “low growth” world, the struggle to find earnings and to achieve sufficient price realization to warrant the capital invested – the traditional heart of what makes a business as we have known it work – will only prove a stiffer test for our moral fiber.
The toughest business problems are moral ones, but tough moral problems get simpler when we aim to, “give the other their due.” [Tweet that!] To be sure, the pressures to compromise are often immense and highly complex. It will always be tempting to hide beneath the convenience of an anonymous corporate or institutional identity and simply make those compromises. Until more recent times, companies (and their decision-makers) have been issued a moral exemption to invoke as grounds for fleecing customers and suppliers, promoting bullies and promising things that are not real. “It’s just a business decision,” was the exemption, but it is steadily being revoked. This is a good thing!
As active participants in these business systems, we each contribute daily to the justice quotient of our organizations whether senior with perceived influence, or junior with high expectations. That means we are given an immense opportunity (and responsibility) to choose, daily, how we each can make the places where we work more just, and not less so. The conversations and actions you have each day shift the moral compass of your organization one way or the other. [Tweet that!]
To be sure, when the purpose of the organization we represent is to deliver social good, then the ancient virtues of prudence, justice, courage (or fortitude) and temperance will prove easier to embrace, but even then the justice equilibrium must be kept pointing in the right direction.
A few simple ways to continue this task more intentionally…
Ask (questions like):
Will this place be more just as a result of my participation today, or less so?
What can I do today to help move the needle 1-degree toward justice?
Are we prioritizing the people we claim to serve in this instance, or something (or someone) else entirely, and why?
Envision (things that will help you become more closely aware of the consequences of a particular choice):
When making a decision or acting on one from above, try to mentally put yourself on the receiving end of that choice. This will develop empathy and help you better anticipate what kind of response to expect.
From time to time, imagine how a good friend would feel if he or she were to be a direct recipient of the way your company is treating its customers.