Business management: Ethical companies, a must for the 21st Century
When we talk about fairness in business, our legalistic alter ego soon comes out, and we say to ourselves, quite convinced that we comply with each and every law. We believe that by complying with the laws, no further moral assessment is needed whether the laws are right or should be updated. The implementation of justice cannot be left to ethicists or lawyers. We cannot simplify the assessment of what is just by making it concrete that it is legal. Practising ethics requires educating practical judgement.
Relatively recently a leading jurist commented that if we had to wait to change legality with the permission of those who gain from current laws, slavery would still exist. And nothing could be truer. In fact, in business, laws are an absolute minimum, but justice, and above all, the fact of producing fair results in the distribution of resources, responsibilities, rewards and recognition, seems to go beyond these legal minimums. The task of managing companies includes assessing whether the business systems that allocate tangible or intangible resources are appropriate. This assessment takes it away from compliance with legality, and even more so from neutrality. A decision must be made that goes beyond purely technical considerations, making it necessary to assess the consequences of the decision, and whether these consequences are good for everyone.
- The law is not enough, we must go one step further.
Using a supposedly neutral technique (or positive law) leads us to overlook the fact that it is not neutral. We pretend that we are using economic science that is supposedly free from any moral evaluations. And we feed it into the technical content of many management programmes. This then ends up being implemented in the company. We think that the (technical) law is enough, and we go further, we delegate the moral aspects to ethical experts. And we justify this with a separation thesis that considers that facts can be observed without assessing them. Any value judgement is dismissed as unscientific, and this is done with arguments along the lines of “we are talking about factual things, we are talking about science, about objective things”. This neutrality with which they want to evaluate decisions is impossible. The separation thesis should be discarded as false rather than useless. The implementation of moral evaluations becomes necessary, and the criteria of justice are a necessary aspect to discriminate criteria to be used in decisions.
Economic laws do not stand alone, like the law of gravity, but are phenomena that act on people, who are willing, motivated and learn for better or worse. Using economic laws that pretend that people are neither motivated, nor willing, nor learning, perpetuates the status quo, or makes it worse. Deciding which criteria should prevail when making a decision, discerning between options and being able to foresee the consequences that decisions have on others. The function of business for some economists is only to create profits, the more, the better. But there is no deterministic law that can force this function. In fact, looking at reality, making companies only have the social function of making profits has not taken us very far, and it therefore seems fair to propose others. Making their function one of generating justice and making justice an intermediary for the common good is absolutely necessary. Businesses must find their usefulness and their social function. If they end up focusing on the common good, promoting justice among all stakeholders, they will find many more followers than they do now, and they will perform a better function.
- Companies of people for people
Another important factor to take into account, which often goes unnoticed, is that the company is like a community of people that participates in a wider community, where people can develop in it and find meaning, this allows it to bring a wider and more authentic legitimization to business activity and helps to understand the very existence of companies, their meaning. Seeing them as a tool for three to get rich makes little sense, which right now is starting to look very ridiculous to many people. And how can you distinguish companies that contribute to the common good from those that don’t? One simple way is to look at their mission, and above all at implementation: the facts. Actions speak louder than words.
To see if companies say they solve and solve real needs with their products and services (they contribute to a social common good), and to see how they do it, i.e. how they use resources and how they treat people (internal common good), becomes absolutely essential if we want to have a business fabric that also helps to change consciences. The contribution to the common good is what makes companies meaningful and allows them to realize their full potential.