Nothing personal - it's just business

I apologize in advance to any unrelenting capitalists out there as I step up on my soapbox. 

The phrase “nothing personal, it’s just business” rankles me, especially in light of a corporation’s sole raison d’etre – to increase shareholder value.  By definition, a corporation’s sole responsibility is to its shareholders.

If I look at John Stuart Mill’s utilitarian ethical theory, I find that the Greatest-Happiness Principle is the central tenant.  Mill argues that actions are right in proportion as they tend to promote happiness, wrong as they tend to produce the reverse of happiness.

Applying this Utilitarianism ethical framework, a corporation will experience the greatest happiness when it has maximized the value of its shareholders investment in the corporation.  This can be construed from the fact that the achievement of goals is desirable, and having one's desires fulfilled brings about a state of happiness.  As previously noted, the only goal a for-profit corporation has is the increase in shareholder value. This then becomes the primary ethical responsibility of a corporation.

Mill goes on to discuss common sense morality, such as:
     •   Keep your promises
     •   Don’t cheat
     •   Don’t steal
     •   Obey the law
According to Mill, these rules tend to promote happiness, so they should be internalized as good rules to follow.  However, these rules are subordinate to the Greatest-Happiness Principle, meaning that if breaking one of these rules would result in much more happiness than following it, then it is my ethical responsibility to break it.

Applying this back to the corporate ethical framework, a corporation should do everything it can to maximize its profitability, thus increasing shareholder value.  Now extending this, the directors and officers of a corporation have a moral responsibility to make decisions that increase its profitability.  Thus the phrase “nothing personal, it’s just business” becomes morally correct regardless of the impact.

"It is the ethical responsibility of officers of a corporation to not recall products, even knowing that some individuals  may become sick or die"

This means that outsourcing and offshoring that increase profitability are an ethical responsibility of a corporation’s officers, regardless of the negative impact to people, communities, or even countries.  Likewise, officers have a moral duty to approve the violation of state and federal regulations, where the total negative financial impact (fines, bad public relations, possible loss of sales) is significantly less than the additional profit to be made. Extending to its logical conclusion, corporate officers are ethically required to make decision that have a good probability of maiming or killing people, if the corporate impact from lawsuits and other foreseeable negatives is sufficiently lower than the cost of remediation.

Let me provide a hypothetical example:

A food manufacturer detects salmonella in one of its products.  This product already caries cooking instructions specifying the food be heated to at least 165 degrees throughout (a temperature that kills the salmonella bacteria).  Further, it determines that legal fees, judgments and negative press will be under $100,000,000.  Recall of all possibly tainted products will cost upwards of $1,000,000,000.  In this case, it is the ethical responsibility of any officer of the corporation to not recall the product, even knowing that some individuals who have not followed the directions may become sick or die.

It might be argued that corporations, as a whole, are “soulless”, being without conscience or compassion.  However, the same argument could not be easily made of a corporation’s officers, directors, and shareholders.  It therefore becomes the responsibility of these individuals to ensure the moral imperatives of the corporation do not override an individual’s personal ethics.  A director or officer can and should resign when their personal morality comes into conflict with their corporate responsibility.  Likewise, a shareholder should sell their stock when personal and corporate morals conflict.

In 1886 the US Supreme Court in Clara Country v Southern Pacific Railroad (118 U.S. 394) established that corporations have the same rights and protections as a natural person.  Chief Justice Morrison R. Waite stated before arguments commenced that “the court does not wish to hear argument on the question of whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of opinion that it does.”  While this did not establish precedent, as it was not included in the official opinion, it none the less prepared the way for the rise of global corporate rule, the results of which we are experiencing today.

Combined, the United States has elevated a soulless artificial construct to the status of a natural person whose sole purpose and moral responsibility is to maximize its profits. We, as employees, officers, directors, shareholders and consumers of these corporations, implicitly support this position through our choice of actions each day.  We choose to buy a company’s product, to own its stock, to enforce its edicts, to make decisions that affect its direction.  These are our personal choices not forced upon us under threat of violence.

So please do not insult my intelligence by saying

“nothing personal, it’s just business”.

 

About business meetings...

I wanted to share a Saturday Night Live sketch about business. Take a look and see if you have not been in this meeting (at least until the last 5 seconds…) at some point in your life. I know I have – on more than one occasion.

One of the more memorable ones was a meeting I attended with a client last November. They are a small (<300 employee) custom automotive parts manufacture that had suffered an exceptionally bad year.  The CEO convened the meeting at 3pm and let all of us know that he had ordered dinner to be catered (and it was *not* pizza or sandwiches) so none of us were going anywhere until the problem had been addressed and a workable plan agreed upon.

My relationship to the company was one of consulting on Information Technology, specifically on aligning technology initiatives with the business goals.   I was actually surprised to be included, as the last three projects I had been engaged to consult on I had recommended against, as they would not generate a positive return.  This included the CEO's desired project to create a highly interactive web site (at a high cost) for a customer base that relied on sales engineers visiting their racing shops to design and/or recommend parts.  All three projects had proceeded, with a collective cost that was a sizeable portion of the company's sales.

Now the company was looking at going on a crash diet as there were insufficient funds.  Numerous suggestions were made, but by 1am it had become obvious that a large portion of the workforce would need to be let go within the week.

After the meeting, the CEO pulled me aside and asked if I would have additional bandwidth to take over managing their IT projects and could I bring on resources to aid in day to day operations as they were letting their whole IT department (5 people, including the manager) go.

I hired four of the five for a small decrease in wages, and then billed at my normal hourly rate.  It is now 5 months later and the company is currently undergoing a reorganizational bankruptcy.  At least from the IT perspective, the costs are close to doubled over what they were.  On a positive note, I was able to defer or cancel the contracts for the three projects...

Oh, and I felt very much like Water Guy...

Business charts in nature

A few weeks ago I posted this picture of a tree, hoping that a few of my blog's visitors would take a moment and share the story this tree brought to their mind. Now I think it is time for me to share my story of this tree.

I am an independent business consultant specializing in assisting smaller businesses maximize their return on their investments in information technology.  While I could go on about my background and experience, it is not really germane to this story. (If you are interested, please stop by my professional portfolio - http:\\www.timfoley.info)

This tree is visible through the window of my home office.  I have enjoyed looking out on it without really seeing it since we first moved to our little country slice of heaven.  The afternoon I snapped this photo may have been the first time I fully appreciated this century old oak.

I was constructing a concept map as part of the preliminary documentation for a new client. As happens many times when I become stuck on a challenging bit, I began staring out into space, letting my mind wander.  That was when I noticed the tree, and my mind began drawing parallels with the concept map I was working on, noticing the similarities between the twisting, interwoven structure of this natural wonder and the interwoven mess of a concept map I was trying my hardest to "straighten out" and simplify.

That is when it struck me.  How would this beautiful oak look if a farmer 75 years ago had decided they needed to straighten the tree out and simplify its structure with an axe and a saw.  No, the tree is what it is, representing the reality of its environment.  Why should I attempt to simplify the complexity of the current status quo that existed with my client?  Instead, I chose to portray it as it had been described and use it as a springboard into a discussion of how to increase efficiency.