Can Business and Ethics Mix?

In 1759 Scottish economist Adam Smith first introduced the concept of ‘the invisible hand’ or ‘the invisible hand of the market’ in the book The Theory of Moral Sentiments. The idea that the marketplace is somehow self regulating and that ambitious individuals, even if only acting for their own benefit, will channel their resources through the marketplace and ultimately this will benefit society regardless of intent.  This theory has been hotly contested ever since. Can business and ethics mix? I would like to think so, although there are countless examples to the contrary.  I’ve recently looked over a book that appears to promote winning at any cost Hardball: Are You Playing to Play or Playing to Win? by George Stalk and Rob Lachenauer.  As the name would suggest it is rough and tumble among other things listing several strategies for crushing your competitors such as the idea that it is decent business to take a good idea, from whom ever or where ever, then assume ownership over it.  They use language like devastate, deceive and massive force to describe their business strategies.  Good idea or bad idea?  Is winning at any cost worth it? I suppose it depends on who you ask. Last week when I wrote about the future of manufacturing in North America I touched on the arctic wear company Canada Goose.  I couldn’t help notice that they devote two pages to discussing their feather and fur policies; knowing full well that their clientele are conscious and concerned about such matters.  The company’s ability to sell their product requires them to not only have a code of ethics, but strongly defend them.  I have a feeling that when that company first began 50-odd years ago this was not an issue of great concern for them or their consumers.  Times change and so do values. Take the chocolate company Hershey’s for example.  In 1909 the American chocolate magnate Milton Hershey and his wife Catherine Sweeney-Hershey founded the Hershey Industrial School for local orphans, 15 years after he founded the Hershey Chocolate Company.   The school, which is still open today and is now known as The Milton Hershey School, gained ownership of the Hershey Chocolate Company along with a mass of Hershey’s wealth in 1918.  Sounds like a great PR move but it makes me wonder, was Hershey’s grand financial gesture the work of ethics or did it benefit him in other ways besides the feelings of goodwill? Major tax benefits may have been a motivator or a productive future workforce.  If it was the former however, was Hershey concerned with any other ethical issues?  Did he concern himself with how the coca was harvested for his product or the sugar?  John Harvey Kellogg, of Kellogg’s cereal fame and Henry Ford of Ford Motor Company had similar ambitions when it came to using their wealth and power for their vision of the greater good. Recently Canadian broadcaster, producer and former advertizing copy writer Terry O’Reilly spoke of something similar on his CBC radio program Under the Influence, a show that examines the advertizing industry.  O’Reilly gave examples of how large companies instead of using ads, “took a stand on social issues, they relied on superlative customer service that would generate word-of-mouth, they gave back to their communities and they stay connected to their customers.” In those cases the companies’ ethical behavior profited them greatly.  I have had situations where clients have stated that making a profit alone leaves them feeling empty.  They demand investments that offer a ‘triple bottom line’: socially responsible, good for the environment and profitable. The tension between ethics verses profits will always be a challenge.  Vigorous corporate governance, strong professional codes of ethics along with government regulation and oversight can never be a substitute for doing the right thing when no one is watching.  Just like our mothers told us. | Raymond Matt, CFP, CLU, TEP, CHS | The Ontarian, Writer, Editor

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